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Trending: MPLX High Dividend at Risk

Dividend.com analyzes the search patterns of our visitors each week. By sharing these trends with our readers, we hope to provide insights into what the financial world is concerned about and how to position your portfolio.

The earnings season has kicked off, giving investors further insight into how the coronavirus pandemic has affected the business world. Microsoft and Lockheed Martin are second and third in the list as both reported strong earnings. NextEra Energy is last in the list as the stock of the leading renewable energy provider continued its gains this year. But first in the list is master limited partnership MPLX.

Don’t forget to read our previous edition of trends here.

MPLX

MPLX (MPLX) has taken the first position in the list this week, with a rise in viewership of 136%. MPLX is attractive for investors due to its high dividend yield of 11.8% as of February 1. However, with a payout ratio of more than 100%, the dividend might be at risk for a reduction.

MPLX is a master limited partnership spun off from Marathon Petroleum around eight years ago that owns and operates midstream energy and infrastructure assets like pipelines, terminals, refinery tanks, and docks, among others. As the oil sector has suffered from the low demand created by the coronavirus pandemic, MPLX’s revenues and cash flows have taken a hit, although not as big as feared.

The company posted two consecutive quarters of losses through March, but profitability strongly rebounded to $648 million in the second quarter of 2020 and $665 million in the third quarter. MPLX’s long-term debt increased in the September quarter to $20 billion from around $19.2 billion in the same period last year.

If the COVID-19 pandemic fades away, demand for oil is likely to increase, thus putting MPLX on a stronger financial footing. However, any further destabilization in the sector is likely to put the dividend at risk.

MPLX Barchart Interactive Chart 02 02 2021

 

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Microsoft

Microsoft (MSFT) has enjoyed a rise in traffic of 74%, as the technology giant rallied on very strong results for the fiscal second quarter.

Microsoft reported earnings per share of $2.03, crushing analysts’ expectations of $1.64. Its revenues for the quarter shot up to $43.08 billion compared with $40.2 billion expected by analysts. The strong figures were largely driven by Microsoft’s cloud unit Azure, which saw its revenues surge 50%. Microsoft’s personal computing segment brought in $15 billion in revenues, up 14% versus the same period last year.

Microsoft CEO Satya Nadella said the past year marked “the dawn of a second wave of digital transformation sweeping every company and every industry.” Indeed, Microsoft experienced high demand for its cloud products as company employees were forced to work remotely due to the coronavirus pandemic.

Shares in Microsoft gained more than 10% since the start of the year, giving the company a market capitalization of $1.8 trillion. Microsoft pays a dividend of $2.24 per share, representing a yield of nearly 1%.

MSFT Barchart Interactive Chart 02 02 2021

 

Check out our latest Best Dividend Stocks List here.

Lockheed Martin

Defense contractor Lockheed Martin (LMT) has taken the third spot in the list with its viewership rising 74%. Lockheed Martin was among the few losers this year, with its stock shedding nearly 6%, despite strong results in the last quarter of the year.

Lockheed Martin’s sales rose to $17 billion in the fourth quarter from around $15.9 billion in the same period last year. Net earnings were up to $1.8 billion from around $1.5 billion. Lockheed Martin’s last quarter was marked by the acquisition of Aerojet Rocketdyne Holdings for $4.6 billion.

The defense industry received a boost during the Trump administration, as budget spending for the military increased. But the new Biden administration indicated the defense budget will remain the same, likely providing opportunities for investors to buy on any weakness.

Lockheed Martin’s dividend yields more than 3% on a payout ratio of nearly 40%.

LMT Barchart Interactive Chart 02 02 2021

NextEra Energy

NextEra Energy (NEE) is last in the list with an increase in viewership of 44%. Shares in NextEra continued their rally this year, as investors are optimistic about the company’s leading renewable energy portfolio.

NextEra reported adjusted earnings of $4.5 billion in 2020 compared to $4 billion in the prior year. NextEra owns utility company Florida Power & Light, and is famous for its huge investments in solar and wind power. Just recently, the company said it plans to add more than 30 GW of renewables to its portfolio by the end of 2024.

NextEra also trended as the company’s stock joined the S&P 500 Dividend Aristocrats in late January. NextEra pays a dividend of $1.40 per share, equal to a yield of 1.70%.

NEE Barchart Interactive Chart 02 02 2021

The Bottom Line

MPLX’s dividend might be at risk as the company pays out more than it earns, although this could represent an opportunity for dividend investors if the energy sector stabilizes. Microsoft has reported blockbuster earnings as the company’s cloud business benefited from the coronavirus pandemic. Defense contractor Lockheed Martin has experienced weakness in its stock lately, despite strong results and signals from the Biden administration that the military budget will not change. Finally, NextEra continues to ride investor optimism regarding its massive investments in renewables.

Be sure to check out Dividend.com’s News section for next week’s Market Wrap and other great dividend investing news.