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Altagas Ltd. vs. BCE Inc.: Which Dividend Stock Deserves to Be in Your Portfolio?

Dividend investors are looking for high-yield picks that offer sustainable distributions.

Let’s take a look at Altagas Ltd. (TSX:ALA) and BCE Inc. (TSX:BCE)(NYSE:BCE) to see if one should be on your buy list today.

Altagas

Investors often skip Altagas when searching for an energy infrastructure name to add to their portfolios, but that might begin to change.

Why?

The company has an attractive mix of power, gas, and utility businesses located in both Canada and the United States.

Over the years, management has done good job finding opportunities in varying regions and segments, and the trend is set to continue.

Altagas announced plans in January to acquire Washington D.C.-based WGL Holdings for $8.4 billion. The deal should close in the first half of next year and is expected to boost earnings per share by at least 7%.

The company also has a number of organic projects on the go, including a natural gas storage facility in Nova Scotia, a propane export terminal in Prince Rupert, British Columbia, and an expansion of its Townsend gas-processing facility.

As new assets come online, Altagas expects cash flow to increase enough to support dividend growth of at least 8% through 2021.

The stock pulled back after the WGL announcement and now offers a 6.8% yield.

BCE

BCE recently closed its $3.9 billion purchase of Manitoba Telecom Services. The deal moves BCE into the top spot in Manitoba and sets it up for an expanded presence further west.

In addition to consolidating the telecom space, BCE has focused investments in the recent years on acquiring media assets, beginning with the purchase of CTV back in 2011, which effective launched the Bell Media division.

The media group now holds sports teams, the TV network, specialty channels, radio stations, and an advertising business.

When these assets are combined with the wireless and wireline networks, you get a very powerful company with a dominant position in the communications market.

BCE’s stock has picked up a bit of a tailwind in the past month, but investors can still get a solid 4.7% yield.

Is one a better bet?

Both stocks are attractive names with above-average yields.

If you have a contrarian edge, Altagas might be the more appealing pick today. The dividend-growth outlook over the medium term is probably a bit higher than that at BCE, and investors could see a nice bump in the stock price once the WGL deal is settled.

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Fool contributor Andrew Walker owns shares of Altagas. Altagas is a recommendation of Stock Advisor Canada.

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