3 High-Yield Stocks You Probably Missed

With the three major indexes at record levels and bond yields looking unappealing, many investors are turning to dividend stocks as a way to fortify their financial holdings. This naturally has the effect of driving up prices on quality dividend stocks, so it pays to find income-generating companies that have been overlooked for one reason or another.

To help readers find worthwhile income investments they might have missed, we asked three Motley Fool investors to profile a high-yield stock that looks to be worth owning for the long haul. Read on to see why they selected Simon Property Group (NYSE: SPG), Phillips 66 Partners (NYSE: PSX), and Vodafone (NASDAQ: VOD).

Avoiding the mauling of malls

Rich Duprey (Simon Property Group): Throwing the baby out with the bathwater. That's essentially what's occurring in the retail real estate investment trust industry, where, because much of the retail landscape is a disaster, it follows that shopping malls will all go down, too.

Although there is some sense to that notion, just because e-commerce is ascendant and the mall anchor is on the wane doesn't mean the biggest, best run mall operators are going down as well. Simon Property Group is one of those that's getting tossed aside along with weaker operators. While it owns and operates malls, the REIT's properties tend to be at higher-quality malls and outlets, and that alone could offer reason for it to be among the last malls standing. Here are a few more reasons to consider Simon Property Group:

• The quality of its malls explains its high occupancy rates, which ended 2016 at over 96%, some 70 basis points higher than the year before.
• It's seeing steadily rising funds from operations (FFO), which are like earnings but used by REITs because of their large rates of depreciation and amortization. In 2016, FFO was $10.49 per share, up 6% from the year before and 31% higher than 2012.
• Base minimum rents also continue to rise, up 5.4% last year to $51.59 per square foot, as it's able to lease available space at higher rents.

It just announced its third dividend increase of the year to a quarterly rate of $1.85 per share, for a yield of 4.7%. That's not the highest yield you'll find among retail REITs, but it's one that's well protected, as it has a payout ratio of just 66% of the company's expected 2017 FFO.

Malls are at risk, and that's why Simon Property Group's stock is down nearly 20% over the past year. But look deeper and you'll find there's a real gem left behind after the bathwater is poured off.

Look beyond the obvious in the oil patch

Dan Caplinger (Phillips 66 Partners): Energy investors are familiar with the high yields they can often find within the sector. Yet one thing that's easy to miss in the oil and natural gas arena is that companies have increasingly sought to create master limited partnerships that can own a portion of their business assets while taking advantage of favorable tax rules. Phillips 66 is one of those companies, and its Phillips 66 Partners MLP boasts a 5% dividend yield that tops that of its related company by two full percentage points.

Phillips 66 created the master limited partnership in order to hold key midstream assets, and its goal in doing so was to create a growing stream of income for investors in the MLP. So far, that mission has worked out quite well, with distributions growing by more than 30% annually since 2013. Unlike some similar MLPs, Phillips 66 Partners has a strong balance sheet, and its disciplined approach to asset acquisitions and project construction has put it in an enviable position compared to some of its peers. With opportunities to pick up valuable assets on the cheap from unrelated entities at the same time that it continues to receive assets from Phillips 66, Phillips 66 Partners has the combination of solid growth prospects and reliable income that high-yield investors want from the investments in their portfolios.

An overlooked telecom giant

Keith Noonan (Vodafone): When it comes to income-generating stocks in the telecoms sector, a lot of attention tends to focus on whether Verizon or AT&T is the better play. There are some good reasons why those two telecom titans soak up so much focus, but Vodafone and its roughly 6% yield also deserve some attention from income-focused investors.

The company is emerging from a big spending period in Europe that should lead to earnings momentum, and its recent merger with Indian wireless carrier Idea gives Vodafone a leading position in the world's fastest-growing cellphone market. The country's wireless market is currently very competitive and far less profitable than its European strongholds as a result, but the situation will probably improve as India's middle class continues to grow and there's more room for premiumization.

Vodafone currently trades at roughly 29 times this year's expected earnings, and the average analyst calls for the company to grow earnings at a rate of roughly 13.5% annually over the next five years. That might make the company's stock look a bit pricey, considering the average S&P 500 company is priced at roughly 20 times forward earnings and is expected to deliver 10% annual earnings growth over the next five years, but Vodafone's big dividend and long-term growth prospects tilt the valuation equation in its favor and make it a stock that should be on income investors' radars.

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Dan Caplinger has no position in any of the stocks mentioned. Keith Noonan has no position in any of the stocks mentioned. Rich Duprey has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.