2 Safe 7% Yielding Blue-Chip Bargains You Won't Want To Miss

Summary

The market soared almost 30% in 2021 and is now 31% historically overvalued.
Fortunately, it's always and forever a market of stocks, not a stock market. Today even 7% safe blue-chip bargains are still available if you know where to look.
ENB and KMI are two safe 7% yielding blue-chips that can help you achieve your financial goals.
These blue-chips are expected to soar 18% to 24% in 2022.
This means they can help you get rich in 2022, and retire even richer in the years and decades to come.
Looking for more investing ideas like this one? Get them exclusively at The Dividend Kings. Learn More »

Gold Colored 2022 Sitting Over American Dollar Bills - Money Printing and Inflation Concept — MicroStockHub/iStock via Getty Images

What a glorious 2021 for investors it was. With very few exceptions, almost everything went up last year.

Value, S&P, small caps, mega-cap tech, high-yield, high-yield low volatility, it was a banner year for nearly all investors in 2021.

Of course, after such a fantastic year, the third in a row, it's important to have realistic expectations for 2022 and beyond.

12-Month Forward S&P Bottom-Up Consensus	5225	Forward PE Forecast (12 Months From Now)	Forward Overvaluation Forecast (12 Months From Now)
12-Month Consensus Market Return Potential	9.6%	21.12	25.6%
12-Month Historical Margin-of-Error Consensus Market Return Potential	8.0%	Historical Margin Of Error	1.60%

(Source: DK S&P 500 Valuation & Total Return Tool, FactSet)

Analysts expect high-single-digit gains in 2022, and with a 10% to 20% correction happening along the way.

For context, in 2021 the market's 29% gain occurred with only a 5.2% peak decline, a very mild pullback. But let's not forget that 2019, 2020, and 2021 were hardly the first incredible years for stocks.

Year	S&P Total Return
2009	26.4%
2010	15.1%
2011	2.1%
2012	16.0%
2013	32.4%
2014	13.7%
2015	1.4%
2016	12.0%
2017	21.8%
2018	-4.4%
2019	31.5%
2020	18.4%
2021	28.7%

(Source: YCharts)

In the last 13 years, the S&P has posted positive gains 12 times and the Nasdaq is up 13 consecutive years. Mind you corporate earnings growth was astonishing in 2021. In fact, analysts are expecting the best earnings growth since FactSet began tracking this in 2008, over 50%.

Year	EPS Consensus	YOY Growth	Forward PE	Blended PE	Overvaluation (Forward PE)	Overvaluation (Blended PE)
2021	$207.47	51.35%	25.8	23.6	50%	34%
2022	$225.62	8.75%	21.1	23.5	23%	33%
2023	$247.86	9.86%	19.2	20.2	12%	15%
2024	$274.50	10.75%	17.4	18.3	1%	4%
12-Month forward EPS	12-Month Forward PE	Historical Overvaluation	PEG	25-Year Average PEG	S&P 500 Dividend Yield	25-Year Average Dividend Yield
$216.08	22.057	31.06%	2.59	3.62	1.35%	2.01%

(Source: DK S&P 500 Valuation And Total Return Tool) updated weekly

And in 2022, 2023, and 2024 analysts expect above-average and accelerating growth thanks to mega-cap tech that makes up 25% of the S&P 500. But guess what? All of that incredible growth is already backed in.

Year	Upside Potential By End of That Year	Consensus CAGR Return Potential By End of That Year	Probability-Weighted Return (Annualized)	Inflation And Risk-Adjusted Expected Returns
2027	26.60%	4.83%	3.62%	0.92%

(Source: DK S&P 500 Valuation And Total Return Tool) updated weekly

In fact, analysts expect very modest 5% long-term returns over the next five years, which when adjusted for the risk of companies not growing as expected and inflation, could result in about 1% annualized returns through 2027.

But remember it's always and forever a market of stocks, not a stock market.

Just because the S&P 500 is likely to have very modest gains in the coming years, doesn't mean that prudent high-yield investors can't keep enjoying strong 2021 style returns in 2022 and beyond.

So let me show you Enbridge (ENB), and Kinder Morgan (KMI) represent two of the safest 7% yields you can buy today.

Analysts expect these 7% yielding blue-chips to deliver extremely dependable, rich-retirement levels of income for decades to come.

They also expect 18% to 24% total returns in 2022 that should leave the S&P in the dust. And these forecasts are entirely justified by fundamentals and valuations.

So let's take a look at why ENB and KMI could be just what your diversified and prudently risk-managed portfolio needs to keep the good times rolling in 2022 and beyond.

Laissez le bon temps rouler. " - French for "let the good times roll"

Enbridge: The Growth And Risk-Management Kind Of Midstream

Full Deep Dive (Including Complete Risk Profile)

2 Rich Retirement Dividend Blue-Chips Set To Soar And Too Cheap To Ignore
15% dividend tax withholding in taxable accounts
NO withholding in retirement accounts
a tax credit recoups the withholding for the vast majority of investors in taxable accounts
NO k1 tax form
qualified dividends

Reasons To Potentially Buy ENB

very safe 6.9% yield (84% safety score)
82% low-risk 13/13 ultra SWAN quality dividend aristocrat
26-year dividend growth steak
20% historically undervalued (potentially strong buy)
fair value: $49.00
8.6X cash flow vs 10 to 13 historical
BBB+ stable credit rating = 5% 30-year bankruptcy risk
risk management consensus 89th industry percentile = very good
6% to 11% CAGR margin-of-error growth consensus range
5% to 7% CAGR management growth guidance
7.8% CAGR median growth consensus
5-year consensus total return potential: 11% to 19% CAGR
12-month total return consensus: 18%

Investment Strategy	Yield	LT Consensus Growth	LT Consensus Total Return Potential	Long-Term Risk-Adjusted Expected Return	Long-Term Inflation And Risk-Adjusted Expected Returns
Enbridge	6.9%	7.8%	14.7%	10.3%	7.9%
Safe Midstream	6.1%	6.2%	12.3%	8.6%	6.2%
Safe Midstream + Growth	3.3%	8.5%	11.8%	8.3%	5.9%
REITs	3.0%	7.0%	9.9%	6.9%	4.6%
Dividend Growth	2.8%	9.4%	12.2%	8.5%	6.1%
High-Yield	2.8%	11.3%	14.1%	9.8%	7.5%
Dividend Aristocrats	2.2%	8.9%	11.1%	7.8%	5.4%
Value	2.1%	12.1%	14.1%	9.9%	7.5%
60/40 Retirement Portfolio	1.9%	5.1%	7.0%	4.9%	2.5%
REITs + Growth	1.8%	8.9%	10.6%	7.4%	5.0%
High-Yield + Growth	1.7%	11.0%	12.7%	8.9%	6.5%
10-Year US Treasury	1.5%	0.0%	1.5%	1.0%	-1.4%
S&P 500	1.4%	8.5%	9.9%	6.9%	4.5%
Nasdaq (Growth)	0.7%	10.7%	11.4%	8.0%	5.6%

(Sources: Morningstar, FactSet, YCharts)

Enbridge not only offers mouth-watering very safe 7% yield, but analysts expect it to potentially beat every major investment strategy over time: aristocrats, dividend growth, high-yield, even the tech-dominated Nasdaq.

That's the power of combining yield, growth, value, and world-class quality and risk-management.

ENB 2022 Consensus Total Return Potential

(Source: FAST Graphs, FactSet Research)

Analysts expect billions of new projects coming online in 2022 to send cash flow at ENB soaring 23% and drive 18% total returns.

If ENB grows as expected and returns to the low end of historical fair value by the end of next year, investors could see 30% gains.

ENB 2027 Consensus Total Return Potential

(Source: FAST Graphs, FactSet Research)

if ENB grows as expected and returns to historical mid-range fair value
then 141% total returns or 16% CAGR
compared to 27% for the S&P 500
potentially more than 5X the market's consensus returns and a very safe 6.9% yield from day one

ENB Investment Decision Score

(Source: DK Automated Investment Decision Tool)

ENB is one of the best high-yield blue-chips you can buy in today's 31% overvalued market.

5X the much safer yield
4X the 5-year risk-adjusted expected return
45% of your investment recouped in the first five years in steadily growing dividends

Kinder Morgan: Rising Like A Phoenix From The Ashes

Full Deep Dive (Including Complete Risk Profile)

3 Reasons Kinder Morgan Has Become A 6.6% Yield Retirees Can Trust
NO k1 tax form
qualified dividends

Reasons To Potentially Buy KMI

safe 6.7% yield (74% safety score)
71% low-risk 10/13 blue-chip quality midstream corporation
3-year dividend growth steak
15% historically undervalued (potentially reasonable buy)
fair value: $19.20
7.0X cash flow vs 7 to 8 historical
BBB stable credit rating = 7.5% 30-year bankruptcy risk
risk management consensus 60th industry percentile = above-average
6% to 8% CAGR margin-of-error growth consensus range
7.0% CAGR median growth consensus
5-year consensus total return potential: 9% to 14% CAGR
12-month total return consensus: 24%

Investment Strategy	Yield	LT Consensus Growth	LT Consensus Total Return Potential	Long-Term Risk-Adjusted Expected Return	Long-Term Inflation And Risk-Adjusted Expected Returns
Kinder	6.7%	7.0%	13.7%	9.6%	7.2%
Safe Midstream	6.1%	6.2%	12.3%	8.6%	6.2%
Safe Midstream + Growth	3.3%	8.5%	11.8%	8.3%	5.9%
REITs	3.0%	7.0%	9.9%	6.9%	4.6%
Dividend Growth	2.8%	9.4%	12.2%	8.5%	6.1%
High-Yield	2.8%	11.3%	14.1%	9.8%	7.5%
Dividend Aristocrats	2.2%	8.9%	11.1%	7.8%	5.4%
Value	2.1%	12.1%	14.1%	9.9%	7.5%
60/40 Retirement Portfolio	1.9%	5.1%	7.0%	4.9%	2.5%
REITs + Growth	1.8%	8.9%	10.6%	7.4%	5.0%
High-Yield + Growth	1.7%	11.0%	12.7%	8.9%	6.5%
10-Year US Treasury	1.5%	0.0%	1.5%	1.0%	-1.4%
S&P 500	1.4%	8.5%	9.9%	6.9%	4.5%
Nasdaq (Growth)	0.7%	10.7%	11.4%	8.0%	5.6%

(Sources: Morningstar, FactSet, YCharts)

If Kinder is able to achieve the 7% growth analysts expect (largely driven through buybacks) then it should outperform aristocrats, dividend growth blue-chips, and even the Nasdaq over time.

KMI 2022 Consensus Total Return Potential

(Source: FAST Graphs, FactSet Research)

Analysts expect KMI to soar 24% more in 2022, which is not quite justified by valuations, but the 16% total return's KMI could deliver is still likely to be substantially better than the S&P 500.

KMI 2027 Consensus Total Return Potential

(Source: FAST Graphs, FactSet Research)

if KMI grows as expected and returns to historical mid-range fair value
then 95% total returns or 12% CAGR
compared to 27% for the S&P 500
potentially almost 4X the market's consensus returns and a safe 6.7% yield from day one

KMI Investment Decision Score

(Source: DK Automated Investment Decision Tool)

KMI is one of the most reasonable blue-chips you can buy in today's 31% overvalued market.

5X the safe yield
nearly 3X the 5-year risk-adjusted expected return
43% of your investment recouped in the first five years in steadily growing dividends

Bottom Line: These Two Very Safe 7% Yielding Blue-Chip Bargains Could Give You A Rich 2022 And Beyond

Interest rates are still low, inflation is still high and the market is once more at record highs.

S&P and Nasdaq valuations are at some of their highest levels in history.

But guess what? It's always and forever a market of stocks, not a stock market.

Today Enbridge and Kinder Morgan represent two safe 7% yielding blue-chips that can help you achieve your rich retirement dreams.

It doesn't take a miracle, or luck to achieve your long-term financial goals.

Luck is what happens when preparation meets opportunity." - Roman Philosopher, Seneca the younger

Dividend Kings has one goal, which is to help regular people like you to take charge of your financial destiny and make your own luck on Wall Street.

Through a prudent combination of the world's best blue-chips and sound risk-management you can stop worrying about what the market does in 2022 or any given year.

From everyone at iREIT and Dividend Kings, I want to wish you and your family a safe, healthy, relaxing, and prosperous new year.

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This article was written by

Dividend Sensei

110.06K Followers

Dividend Sensei (Adam Galas) is an Army veteran and stock analyst with 20+ years of market experience.

He is a founding author of the investing group The Dividend Kings which focuses on helping investors safeguard and grow their money in all market conditions through the highest-quality dividend investments. Dividend Sensei and the team of analysts (Brad Thomas, Justin Law, Nicholas Ward, Chuck Carnevale, and Sebastian Wolf) help members invest more intelligently in dividend stocks. Features include: 13 model portfolios, buy ideas, company research reports, and a thriving chat community for readers looking to learn how to invest more intelligently in dividend stocks. Learn more.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of KMI, ENB either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Dividend Kings owns KMI, and ENB in our portfolios.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.