If You Like Dividends, You Should Love These 3 Stocks

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The average stock in the S&P 500 currently has a dividend yield of 1.8%, which is about half the long-term average. Meanwhile, even with interest rates on the rise, the yields offered by bank CDs and government bonds aren't that much more attractive. Because of that, it doesn't take much to excite most income-seeking investors these days.

That's why those who like dividends will undoubtedly love what Enterprise Products Partners (NYSE: EPD), Magellan Midstream Partners (NYSE: MMP), and MPLX (NYSE: MPLX) have to offer. Not only does this trio of energy midstream master limited partnerships (MLPs) pay well-above-average dividends that currently have yields of between 5.6% and 7.2%, but they have consistently increased their payment rate each quarter. With those payouts on rock-solid ground and more growth in the forecast, this trio of MLPs is perfect for dividend fans.

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A highly secure high yield

Enterprise Products Partners is one of the largest midstream MLPs in the country. Not only does the company operate 50,000 miles of pipelines, but it also owns facilities that process, store, and export petroleum products. Long-term contracts back these assets, enabling the company to collect a steady diet of fees as volumes flow through its system. Currently, those contracts throw off enough cash flow to cover Enterprise's payout by 1.5 times, which is well above the 1.2 times average of most MLPs. Add to that the fact that Enterprise has a strong balance sheet -- including one of the highest credit ratings among MLPs -- and its 5.8%-yielding distribution is on a firm foundation.

However, as much as income investors will love that high yield, what makes Enterprise even more appealing is its steady growth. The company has increased its payout in each of the last 56 quarters and 65 times overall since its initial public offering (IPO) in 1998. Meanwhile, the company has plenty of fuel to continue increasing its distribution to investors in the future since it has $5.7 billion of expansion projects under construction and more on the way. Add in the fact that the company sells for a cheap price, and Enterprise is a top choice for dividend lovers.

Visible growth on the horizon

Magellan Midstream Partners shares many of the same qualities as Enterprise Products Partners. It too operates a vast portfolio of pipelines and terminals that generate steady cash flow. Currently, the company expects to produce enough cash to cover its 5.6%-yielding payout by more than 1.2 times. Meanwhile, the company is in a tie with Enterprise for the top credit rating among MLPs, meaning it too has a top-tier balance sheet.

Magellan has also increased its payout 65 times since its IPO, which was in 2001, including in each quarter since 2010. The pipeline company expects to continue raising its payout in the coming years, targeting 8% growth in 2018 and 5% to 8% increases in 2019 and 2020. The company has already locked up $2 billion of expansion projects to fuel this growth, which, when added to its top-tier financial profile, makes it quite likely that the MLP can continue boosting its payout each quarter.

A higher yield with a new growth engine in the works

MPLX offers the highest yield of this bunch at 7.2%. That payout is also on a firm foundation since the company covered it with cash flow by 1.36 times last quarter. Further, its leverage ratio is right in line with Enterprise and MPLX. Because of that, the company shouldn't have any problems maintaining its payout in the years ahead.

Instead, MPLX should be able to continue growing its distribution to investors, which is something it has done in each of the last 22 quarters. The company started the year with $2 billion in expansion projects underway, which it expected would fuel 10% distribution growth for 2018. However, the company has gone on to secure several new expansion projects this year, including beginning the next phase of its evolution by participating in the development of new long-haul oil and gas pipelines. With several projects secured and others in the pipeline, MPLX should have plenty of fuel to continue growing its payout in the coming years.

Top options for dividend seekers

Enterprise Products Partners, Magellan Midstream Partners, and MPLX not only offer well-above-average yields, but these companies have a history of increasing their payouts each month. That steadily rising income stream has the potential to fuel market-beating gains in the coming years, which is why those who like dividends should love this trio of MLPs.

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Matthew DiLallo owns shares of Enterprise Products Partners. The Motley Fool recommends Enterprise Products Partners and Magellan Midstream Partners. The Motley Fool has a disclosure policy.