Canadian National Railway (USA) (CNI), Norfolk Southern Corp. (NSC), Grupo Aeroportuario del Pacifico (ADR) (PAC), Grupo Aeroportuario del Sureste (ADR) (ASR), Enterprise Products Partners L.P. (EPD): 5 Natural Monopolies for Dividend Investors

Plane traffic is usually quite cyclical and both companies are exposed to exchange rate fluctuations. However, the dividend yields of 5.3% and 2.9% for Grupo Aeroportuario del Pacifico (ADR) (NYSE:PAC) and Grupo Aeroportuario del Sureste (ADR) (NYSE:ASR) respectively provide adequate compensation for the risks, and the payout ratios of 63.4% and 52.4% leave ample room for further increases.

Dividends in the pipeline

Enterprise Products Partners L.P. (NYSE:EPD) is the biggest listed master limited partnership in the U.S. The company transports and processes natural gas, natural gas liquids, crude oil, refined products and petrochemicals. It has a unique and integrated asset base across the midstream value chain serving both oil and gas producers and petrochemical end users.

By connecting supply with demand and providing value-added services at each point along the midstream value chain, the company is a major beneficiary from the energy revolution currently taking place in the United States. Competitors would hardly choose to replicate such an enormous and strategic asset base. Instead, different players in this industry usually work together via joint ventures and complementary projects

Master limited partnerships don’t pay taxes at the corporate level, and this lowers their cost of capital in comparison to their incorporated peers. Another implication of this partnership structure is that companies are required to distribute the majority of their cash flows to shareholders. In Enterprise Products Partners L.P. (NYSE:EPD)’s case, this means a dividend yield of 4.6% at current prices.

Bottom line

When it comes to looking for companies with the strong competitive advantages, natural monopolies can offer remarkably attractive opportunities to consider. These rock-solid dividend stocks are in a position of extraordinary strength to continue benefiting investors with growing cash distributions for years to come.

The article 5 Natural Monopolies for Dividend Investors originally appeared on and is written by Andrés Cardenal.

Andrés Cardenal has no position in any stocks mentioned. The Motley Fool recommends Canadian National Railway, Enterprise Products Partners L.P., Grupo Aeroportuario del Pacific S.A.B (ADR), and Grupo Aeroportuario del Sureste (ADR). 

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