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The stock market has experienced significant fluctuations in recent weeks, marked by the S&P 500 momentarily slipping into bear market territory, defined by a 20% decline from its recent high. This volatility was driven in part by President Donald Trump’s decision to impose substantial reciprocal tariffs on imports. However, a subsequent announcement to suspend these tariffs for 90 days led to a dramatic surge in stock prices, marking one of the most robust trading days since World War II.
This tumultuous market behavior complicates investment strategies, particularly as many economists express concerns that such high tariffs could trigger a severe recession. While an economic downturn could adversely affect numerous companies, some firms possess inherently stable business models that may offer greater resilience during tough times.
Among these companies, Enterprise Products Partners (EPD 1.17%), NextEra Energy (NEE -1.51%), and Brookfield Infrastructure (BIPC 1.93%) (BIP 2.80%) are highlighted by several contributors from Fool.com for their robust operations. Their resilient business structures position them well to sustain and potentially increase their high-yield dividends even in a turbulent economic landscape.
Enterprise Products Partners: A Reliable Yield of 6.9%
Reuben Gregg Brewer (Enterprise Products Partners): With an impressive history of 26 consecutive annual distribution increases, Enterprise Products Partners has established itself as a reliable performer for investors. The firm’s 6.9% distribution yield adds to its appeal, making it an attractive buy in the current market environment.
Energy remains a fundamental necessity, and although energy prices can fluctuate, the stable cash flows generated by Enterprise’s extensive midstream infrastructure provide a strong financial foundation. Given the expected robust demand for energy, Enterprise is likely to continue generating significant distributable cash flow, which was reported at 1.7 times coverage for its distribution in 2024, offering ample protection against potential downturns.
Additionally, Enterprise boasts an investment-grade-rated balance sheet, alongside $7.6 billion in capital projects underway. In adverse scenarios, the company can rely on its solid balance sheet to support its distribution. Conversely, in a favorable environment, new investments can further enhance cash flow, positioning Enterprise to reward its investors consistently.
NextEra Energy: Stability Amid Economic Fluctuations
Matt DiLallo (NextEra Energy): Operating one of the largest electric utilities in the nation, Florida Power & Light, NextEra Energy delivers stable cash flows that are bolstered by government-regulated rates and an upsurge in electricity demand. Additionally, the company’s portfolio in energy infrastructure—NextEra Energy Resources—generates consistent cash flow supported by long-term fixed-rate agreements, making it exceptionally resilient during economic downturns.
NextEra has demonstrated its reliability through consistent dividend increases over the past 30 years, a period that has included numerous recessions. The company anticipates continuing to grow its dividend, targeting an annual increase of approximately 10% through at least 2026. With a below-average payout ratio and a clear growth trajectory, NextEra is poised to deliver robust dividend growth.
The company expects its adjusted earnings per share to grow at a rate of 6% to 8% annually until 2027, powered by substantial investments in renewable energy capacity. With accelerating demand for electricity driven by trends like onshoring of manufacturing, the rise of electric vehicles, and AI data centers, utilities like NextEra are well positioned to capitalize on increased power needs, with forecasts predicting a 55% growth in electricity demand by 2040.
Brookfield Infrastructure: Consistent Dividend Growth
Neha Chamaria (Brookfield Infrastructure): Brookfield Infrastructure has maintained a commendable record of increasing its dividend for 16 consecutive years, which is underpinned by growing cash flows. This track record illustrates why the company stands out as a potential beneficiary, regardless of market conditions.
Brookfield Infrastructure’s dividend has achieved a compound annual growth rate (CAGR) of 9% between 2009 and 2024, supported by a 15% CAGR in funds from operations (FFO) during the same period. This consistent cash flow enables ongoing investment in growth initiatives while providing ample dividends to shareholders.
The firm operates a diverse portfolio of assets that are largely regulated, including utilities, railways, toll roads, midstream energy, and data centers, with approximately 85% of its FFO coming from regulated sources or contracted revenue indexed to inflation. This structure ensures steady cash flows, making Brookfield Infrastructure an appealing choice in uncertain economic times.
Moreover, the company adeptly recycles capital, selling mature assets and reinvesting the proceeds into new opportunities. For instance, in March, it divested a 25% stake in a U.S. gas pipeline and recently announced plans to acquire midstream energy assets from Colonial Enterprises. The combination of robust cash flow and strategic capital management allows Brookfield Infrastructure to not only bolster its business but also continually reward shareholders, with current yields of 4.9% for corporate shares and 6.2% for partnership units, alongside a 5% to 9% annual dividend growth target.
Source
www.fool.com