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3 Dividend Stocks I’d Buy With $5,000

It’s hard to beat dividends.

Stock prices are unpredictable from day to day, but dividends are like the Swiss trains of finance: they almost always arrive on schedule, regardless of what kind of turmoil is going on in the market.

That’s why if you’re just getting started, you could do worse than double-down on income stocks. But wading through hundreds of companies can be a challenge for the beginner. If I were investing my first $5,000, here are three reliable dividend payers I would buy.

1. TransCanada Corporation

TransCanada Corporation (TSX:TRP)(NYSE:TRP) is in the energy industry, but it isn’t exactly an oil company.

Instead, the firm owns a collection of pipelines, terminals, and storage facilities across the continent. In exchange for shipping commodities like oil and gas, TransCanada charges a fee that it passes onto investors.

That’s why I love this business. Sure, commodity prices can fluctuate wildly from year to year. But the total volume of crude actually being moved remains remarkably consistent. As a result, the company’s cash flows are steady, like bond coupons.

For shareholders, this has translated into a growing stream of dividends. TransCanada has hiked its distribution every year since 2000. Today, the company pays out a dividend of $0.52 per share each quarter, which comes out to an annualized yield of 3.7%.

2. BCE Inc.

If you want to own a sexy tech stock to impress your coworkers around the water cooler, then BCE Inc. (TSX:BCE)(NYSE:BCE) isn’t for you. But if you like good, old fashioned dividends, then you’ll like this stock just fine.

BCE certainly isn’t the sexiest business around. The landline industry died years ago. Wireless growth is starting to slow down, too. Everyone knows future earnings growth will be meager at best.

That said, BCE still cranks out some of the safest dividends around. Of course, when a stock yields nearly 5%, no one in their right mind should expect much in the way of earnings growth. But shareholders who sit around patiently reinvesting their dividends will easily beat most other investors as the years tick by.

3. RioCan Real Estate Investment Trust

If I had to own just one income name in my portfolio, it would have to be RioCan Real Estate Investment Trust (TSX:REI.UN).

The dividend, which yields 4.9% and is paid monthly, is definitely nice. However, my reason for loving this firm goes beyond that.

The business is simple. RioCan buys retail properties and then rents them to top notch tenants. And in order to produce growth, the company often borrows money to acquire new properties.

So, why invest in commercial real estate instead of, say, apartment buildings? They’re more stable investments. In the retail space, rent increases are usually built into the lease and tenants are locked-in for15 years or more. This keeps turnover low and creates a predictable, growing income stream.

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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 Robert Baillieul has no position in any stocks mentioned.

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