Black Friday. For millions of Americans, the day means waiting in long lines to buy gifts for the holidays while stores are running their best sales of the year.
Income investors can benefit from their own version of a Black Friday sale, without dealing with the crowds and the traffic. These three ultra-high-yield dividend stocks are bargain buys.
Image source: Getty Images.
1. Energy Transfer LP
Energy Transfer LP (ET +0.98%) is a limited partnership (LP) that operates around 140,000 miles of pipeline and other energy infrastructure assets related to transporting and storing crude oil, natural gas, and natural gas liquids (NGLs). It also owns Lake Charles LNG Company, roughly 15% of Sunoco LP (SUN +0.81%), and around 38% of USA Compression Partners, LP (USAC +2.52%).
Income investors should love Energy Transfer’s distribution yield of 8.2%. The LP expects to increase its distribution by 3% to 5% annually. That goal seems quite attainable at the moment, with Energy Transfer enjoying its strongest financial position ever.
Energy Transfer
Today’s Change
(0.98%) $0.16
Current Price
$16.43
Key Data Points
Market Cap
$56B
Day’s Range
$16.26 – $16.50
52wk Range
$14.60 – $21.45
Volume
163
Avg Vol
14M
Gross Margin
12.85%
Dividend Yield
8.00%
As a bonus, Energy Transfer sports a dirt cheap valuation. Its units trade at 10.7 times forward earnings, compared to an average forward earnings multiple of 15.7 for the S&P 500 (^GSPC +0.69%) energy sector. The midstream leader’s enterprise value-to-EBITDA ratio is 7.7, the second-lowest level among its peers.
There’s more good news for Energy Transfer as well. The LP should deliver solid growth over the next few years as coal-fired power plants switch to natural gas and new data centers hosting electricity-hungry artificial intelligence (AI) applications are built that are powered by natural gas.
2. United Parcel Service
Most Americans routinely benefit from what United Parcel Service (UPS +1.20%) does. The company delivers around 22.4 million packages daily across more than 200 countries and territories.
UPS is another exceptional pick for income investors. Its forward dividend yield tops 6.9%. The package delivery giant has increased its dividend for 16 consecutive years and has either maintained or grown its dividend since going public 26 years ago.
United Parcel Service
Today’s Change
(1.20%) $1.13
Current Price
$95.67
Key Data Points
Market Cap
$81B
Day’s Range
$93.76 – $95.80
52wk Range
$82.00 – $136.99
Volume
1.4K
Avg Vol
7.9M
Gross Margin
18.48%
Dividend Yield
6.86%
In a stock market that’s seemingly priced for perfection, UPS looks like a bargain. Its forward earnings multiple is 12.8. UPS’ low EV-to-EBITDA of 8.9 is even more attractive.
Sure, the company faces some challenges, including headwinds from the Trump administration’s tariffs. However, I think that management’s strategy to phase out much of its Amazon (AMZN 0.22%) shipments, restructure its operations accordingly, and focus on higher-margin business, such as healthcare logistics, should pay off. In my opinion, UPS is on the right track to deliver stronger profitability and free cash flow.
3. Verizon Communications
Like UPS, Verizon Communications (VZ +0.71%) is a household name. The telecommunications leader serves more than 146 million wireless customers and 99% of the Fortune 500.
Verizon has been a longtime favorite for income investors. It still is, with a juicy forward dividend yield of 6.8%. The company has also increased its dividend for an impressive 19 consecutive years.
Verizon Communications
Today’s Change
(0.71%) $0.29
Current Price
$40.88
Key Data Points
Market Cap
$172B
Day’s Range
$40.56 – $40.97
52wk Range
$37.59 – $47.35
Volume
1.4K
Avg Vol
26M
Gross Margin
46.08%
Dividend Yield
6.66%
Is this telecom stock a bargain buy for Black Friday? I think so. Verizon’s forward price-to-earnings ratio is 8.3. That’s well below the forward earnings multiples for the company’s major rivals, AT&T (T 0.15%) and T-Mobile US (TMUS +0.41%). Similar to Energy Transfer and UPS, Verizon appears even more attractive based on its low EV-to-EBITDA ratio of 6.5.
Verizon’s new CEO, Dan Schulman, who formerly served as CEO of PayPal Holdings (PYPL +1.00%), seems to be the right leader to move the company forward. He promised in the Q3 update, “We will aggressively transform our culture, our cost structure, and the financial profile of Verizon in order to put our customers first, compete effectively, and deliver sustainable returns for our shareholders.”