Michael Hodel: In looking at Morningstar's Best Ideas List recently, one thing that really struck me was the high percentage of firms that have very generous dividend yields. More than 20% of the stocks that Morningstar's analysts find the most attractive on a valuation basis also provide a yield greater than 5%.
A couple of sectors that are very well represented in that group are energy firms and telecom firms, which you'd expect. Among the energy firms, midstream in particular is attractive. Enbridge is a great example of that. Enbridge is a very well diversified midstream company with natural gas pipelines, oil pipelines, and it's also the largest natural gas distributor in Canada. The stock yields more than 6%, and we expect that dividend to grow at around 10% over the next couple of years.
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Michael Hodel does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.