Income Investors: 2 High-Yield Stocks That Should See Big Dividend Hikes in 2018

Here’s why Altagas Ltd. (TSX:ALA) and another stock deserve to be on your radar.

| More on:
dividends

Canadian dividend investors are always searching for quality income stocks that have the potential to raise their distributions every year.

Once in a while, the market provides an opportunity to pick up such names at attractive prices, while offering above-average yields.

Let’s take a look at Enbridge Inc. (TSX:ENB)(NYSE:ENB) and Altagas Ltd. (TSX:ALA) to see why they might be interesting picks.

Enbridge

At the time of writing, Enbridge is down 16% in 2017, and that’s after a multi-day mini-rally that saw the stock jump from $44 to $47.50 per share.

Bottom feeders who picked the stock up at the recent low are all smiles, but the opportunity still exists to get in at a reasonable price and secure an attractive 5.1% yield.

Enbridge has had a busy year, with its $37 billion purchase of Spectra Energy. The Spectra deal, which closed in early 2017, added important gas assets and provided a nice boost to the near-term capital plan.

In fact, Enbridge has about $31 billion in commercially secured developments on the go that should translate into a nice increase to revenue and cash flow in the medium term.

In the Q1 2017 earnings report, Enbridge said it expects to deliver annual dividend growth of 10-12% through 2024, as the new assets are completed and go into service.

The statement was omitted from the Q3 report, which might be why investors initially sold the stock. It was just announced that dividend growth won’t hit the top end of the target, but investors should still see attractive increases in the coming years, and they can already pick up a great yield.

Altagas

Some pundits view Altagas as a mini-Enbridge.

The company has gas, utility, and power assets in Canada and the United States, and it continues to grow through a mix of strategic acquisitions and organic projects.

The big play this year is the purchase of Washington, D.C.-based WGL Holdings for $8.4 billion.

Investors are concerned Altagas might not be able to sell some non-core assets at targeted prices to help pay for the deal. The coming months will tell, but management expects the acquisition to close in the first half of next year, and the company is anticipating annual of dividend increases of at least 8% for 2019-2021. Investors could see a hefty rise in 2018 as well.

The existing assets are performing as expected, and Altagas just bumped up the dividend by 4%, so management can’t be overly concerned about the revenue and cash flow outlook.

The stock has bounced off the lows of the year, but is still down 13% in 2017 and offers a juicy 7.4% yield.

The bottom line

Once in a while, income investors get a treat, and Enbridge and Altagas are just two of the attractive stocks out there that deserve a closer look today.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Andrew Walker owns shares of Enbridge and Altagas. The Motley Fool owns shares of Enbridge. Enbridge and Altagas are recommendations of Stock Advisor Canada.

More on Dividend Stocks

Two seniors float in a pool.
Dividend Stocks

TFSA: How to Earn $1,890 in Annual Tax-Free Income

Plunk these investments into your TFSA to earn passive income and avoid the taxman.

Read more »

Engineers walk through a facility.
Dividend Stocks

1 TSX Stock I Wouldn’t Touch With a 10-Foot Pole

AtkinsRéalis (TSX:ATRL) is one TSX stock I'd never invest in.

Read more »

edit Woman in skates works on laptop
Dividend Stocks

3 No-Brainer Stocks to Buy Under $30

These three stocks all offer a huge deal for investors looking for dividends, as well as growth that will last.

Read more »

You Should Know This
Dividend Stocks

How to Convert a $300 Monthly Investment Into $338 in Monthly Income

If you want a certain amount in monthly passive income, invest a similar amount today and leave the rest to…

Read more »

Increasing yield
Dividend Stocks

3 Income Stocks With Big Yields to Consider in April 2024

If you haven’t yet made your March investments, here are three income stocks to buy the dip and lock in…

Read more »

Senior Man Sitting On Sofa At Home With Pet Labrador Dog
Dividend Stocks

RRSP Investors: Don’t Miss Out on This Contribution Hack!

This hack has so many benefits for you -- not just when you put it in your RRSP but for…

Read more »

A red umbrella stands higher than a crowd of black umbrellas.
Dividend Stocks

Passive Income: 2 Safe Dividend Stocks to Own for the Next 10 Years

Dividend stocks such as Manulife and Fortis can help you generate a stable and recurring passive-income stream.

Read more »

Young woman sat at laptop by a window
Dividend Stocks

3 Dividend Stocks Everyone Should Own for the Long Haul

For investors looking for top-tier dividend stocks to buy and hold for the long term, here are three of my…

Read more »