3 High-Yield Dividend Stocks You Definitely Want to Consider

By Markets Fool.com

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Finding high-yield investments can be a challenge. All too often, high-yield investments are such because either the businesses themselves or the payouts they give aren't sustainable. So when looking for a high-yield dividend stock for your portfolio, you have to search especially hard for a quality business that has the competitive advantages and cash flow to keep its payments up.

Three companies that fit this mold rather well are natural-gas pipeline partnership Spectra Energy Partners (NYSE: SEP), nitrogen-fertilizer manufacturing partnership Terra Nitrogen(NYSE: TNH), and healthcare-centric Real Estate Investment Trust HCP (NYSE: HCP). Let's see why these companies are worth considering for your portfolio.

High-yield energy investment with lots of room to run

One of the things that makes Spectra Energy Partners unique in the world of pipeline companies is that it has somehow figured out the balance between huge growth and keeping its balance sheet in decent order. While so many other pipeline partnerships were touting huge growth plans that were eventually cut because of the downturn, SEP and its managing partner Spectra Energy (NYSE: SE)managed to find more projects to add to the construction backlog that they plan to complete by the end of the decade.

Image source: Spectra Energy investor presentation.

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At the same time, though, Spectra Energy Partners hasn't used that huge growth plan to binge on debt. The company's ratio of net debt to EBITDA (earnings before interest,taxes, depreciation, and amortization) -- 4.1 -- is low enough (for an MLP) to be in the range that credit ratings agencies look for when handing out investment-grade ratings.One reason it could achieve this is that it keeps its payouts to shareholders lower than it could every quarter, electing to use some of that money to reinvest in the business. That may sound like a "no duh" kind of business practice, but you'd be surprised how many pipelines and partnerships don't do it.

Between this and Spectra Energy Partners' distribution yield of 5.5%, it is definitely a company worth considering.

A variable payout that has remained strong

For some reason, investors are turned off by the idea that a payout can vary from quarter to quarter based on the financial performance of the company. Sure, it means that your payout isn't as steady as a paycheck, but there are opportunities to pick up these variable payouts on the cheap. One great example is Terra Nitrogen Partners. Even though the company has a variable payout, its yield and return on capital employed have remained high for quite some time.

TNH Dividend Yield (TTM) data by YCharts.

Terra Nitrogen may be in the commodity business of manufacturing nitrogen fertilizers, but the boom in U.S. shale gas has given it a leg up on the competition, with an incredibly cheap feedstock that makes it one of the lowest-cost providers in the world. It also helps that the partnership is completely debt-free: All operational profits flow straight to the bottom line and into investors' pockets. After all, that variable-rate dividend means that the companypays out all cash it doesn't need for maintenance capital.

Shares of Terra Nitrogen aren't at their lowest price we've seen recently, but the company is still trading at an 8.2% yield in the middle of a depressed nitrogen-fertilizer market. If we were to see any uptick in the future, that payout would go with it.

Yielding profits from demographics

As life expectancy increases, so too does the overall population in older generations. One of the harsh realities of an older population is that they require greater healthcare needs, which in turn means greater demand for care-service facilities of all kinds. A unique angle on investing in this trend is healthcare-related real estate, and one great way to get a high yield from this opportunity is HCP.

For more than 30 years, the company has been able to leverage its ownership of healthcare facilities into a steadily increasing dividend to investors, which today stands at 5.8%. What is more promising about this stock, though, is that there is so much more opportunity out there. The healthcare-related real estate market in the U.S. is valued at around $1 trillion, and no single entity owns more than 3% of the market.

Like every business that sports such a high yield, it will have to manage the difficult balancing act of growing its portfolio and its payout without stretching the balance sheet too far. The spinoff of its post-acute care and skilled nursing propertiesshould free up plenty of cash to help, and the company does have a long track record of managing that balancing act, which should give investors some confidence it can continue to do so.

The demographics of America's population and the fragmented healthcare property market suggest that there's no lack of opportunity for HCP to capitalize on this lucrative market.

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Tyler Crowe owns shares of HCP and Terra Nitrogen.You can follow him at Fool.comor on Twitter@TylerCroweFool.

The Motley Fool owns shares of and recommends Spectra Energy. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.