Looking for Some Extra Income? Here's a 9%-Yielding Dividend Stock Worth Considering

A stack of $100 bills.

On average, dividend-paying stocks currently yield around 1.8%. That's half the historical average and less than what some bank CD's pay these days. Because of that, income-seeking investors need to dig a little deeper if they want a bigger cash flow stream.

One option worth a closer look is Enable Midstream Partners (NYSE: ENBL) . The midstream MLP currently offers an eye-catching 9% yield backed by solid financials that put it on a firm foundation.

Enable Midstream Partners 101

Enable Midstream Partners operates oil and gas infrastructure assets primarily in the central part of the U.S. The company makes most of its money gathering and processing natural gas produced in three major basins, highlighted by the Anadarko Basin, which holds the fast-growing STACK Shale play where the company controls a market-leading asset footprint.

In addition to that, the company operates a transportation and storage segment, which consists mainly of four natural gas pipeline systems that help move gas from production basins to market centers. For example, the company is a 50-50 joint venture partner with Spectra Energy Partners (NYSE: SEP) on the Southeast Supply Header system, which is a 290-mile pipeline that moves gas from a hub in northern Louisiana to the Gulf Coast. The assets in this segment tend to generate very stable cash flow for Enable since 96% of its earnings come from predictable fee-based contracts.

Drilling into the numbers

Last year, Enable's midstream assets produced $660 million in distributable cash flow, which was up 3.3% from 2016 thanks to an improvement in volumes across its systems as a result of higher commodity prices. The company also benefited from the acquisition of Align Midstream as well as from placing additional expansion projects into service. This cash flow was enough to cover the company's high-yield payout by a comfortable 1.2 times, which, for perspective, matched Spectra Energy Partners' coverage ratio.

Meanwhile, Enable Midstream maintains a solid balance sheet, ending last year with a debt-to- EBITDA ratio of 3.75 times. That's below its 4.0 times target and a comfortable level for an MLP. For example, investment-grade rated Spectra Energy Partners ended last year at 4.1 times debt-to-EBITDA.

That solid financial foundation has given Enable the flexibility to invest in expansion projects that should boost cash flow this year. Overall, the company expects to generate $650 million to $710 million in distributable cash flow, up more than 7% from last year at the midpoint, which would cover its high-yielding payout by 1.10 times to 1.25 times, a slightly better level than the 1.1 times to 1.2 times anticipated by Spectra Energy Partners. Given that strong coverage, it's possible that Enable could restart distribution growth in the coming year, which is something the company hasn't done since 2015 due to the turbulence in the oil and gas market. That said, there's no guarantee Enable will grow its already high-yielding payout, so investors need to be content with just the steady income stream. That lack of visible income growth is worth noting considering Spectra Energy Partners offers highly visible distribution growth, with plans to increase its 7.7%-yielding payout by 7% this year and at a 4% to 6% annual rate in 2019 and 2020.

One thing to keep an eye on

While Enable Midstream is a publicly traded company, potential investors should know that it's majority-owned by utilities CenterPoint Energy (NYSE: CNP) and OGE Energy (NYSE: OGE) . CenterPoint currently controls a 54.1% stake while OGE holds a 25.7% interest, leaving just 20.2% of the company in the hands of the public. That's worth noting because in late 2016 OGE Energy attempted to buy out CenterPoint's interest but had its offer rejected. According to analysts, CenterPoint isn't likely to part with its stake unless the company can merge it with another midstream entity because it wants to avoid what at the time would have been a $1.3 billion tax liability.

While this previous attempt failed , it's possible that at some point these partners might want to part with their holdings, which could result in a sale of the entire company. This potential outcome makes the long-term outlook of Enable's high-yield income stream a little less certain.

A solid high-yield option

Enable Midstream isn't a flashy growth stock by any means. In fact, it has more in common with a high-yield bond since it hasn't increased its distribution to investors in years and might not in the future. However, for those who just want a higher-yielding income stream, Enable Midstream looks like it could fit the bill.

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Matthew DiLallo has no position in any of the stocks mentioned. The Motley Fool recommends Spectra Energy Partners. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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