3 Top Dividend Stocks for Any Investor

Brookfield Renewable Energy Partners LP (TSX:BEP.UN)(NYSE:BEP), Smart REIT (TSX:SRU.UN), and Domtar Corp. (TSX:UFS)(NYSE:UFS) all have yields of over 4%. Which should you buy?

| More on:

Whether you’ve just opened your first brokerage account or have been investing for years, you must own at least one dividend-paying stock, because they outperform non-dividend-paying stocks over the long term. With this in mind, let’s take a look at three stocks with yields of more than 4% that you could buy today.

1. Brookfield Renewable Energy Partners LP: 6.2% yield

(All figures are in U.S. dollars)

Brookfield Renewable Energy Partners LP (TSX:BEP.UN)(NYSE:BEP) operates one of the largest publicly traded, pure-play renewable energy platforms in the world. It pays a quarterly dividend of $0.415 per share, or $1.66 per share annually, giving its stock a 6.2% yield at today’s levels.

Investors should also make two notes. First, Brookfield has increased its dividend for five consecutive years. Second, the company has a long-term goal of increasing its distribution by 5%-9% annually, which would represent an average payout of 60-70% of its funds from operations.

2. Smart REIT: 5.4% yield

Smart REIT (TSX:SRU.UN), formerly known as Calloway REIT, owns and operates 137 shopping centres in Canada, totaling approximately 30.5 million square feet of gross leasable area. It pays a monthly distribution of $0.1375 per share, or $1.65 per share annually, which gives its stock a 5.4% yield at current levels.

Investors should also note that Smart REIT has increased its distribution for two consecutive years, and its increased amount of funds from operations, including a 9.2% year-over-year increase to $136.46 million in the first half of fiscal 2015, could allow this streak to continue in 2016.

3. Domtar Corp.: 4.1% yield

(All figures are in U.S. dollars)

Domtar Corp. (TSX:UFS)(NYSE:UFS) is one of the world’s leading distributors of fibre-based products, including communication papers, specialty and packaging papers, and absorbent hygiene products. It pays a quarterly dividend of $0.40 per share, or $1.60 per share annually, giving its stock a 4.1% yield at today’s levels.

It is also important to note that Domtar has increased its dividend for five consecutive years, but its decreased amount of free cash flow, including a 21.5% year-over-year decline to $113 million in the first half of fiscal 2015, could cause this streak to end in 2016.

Which of these dividend stocks belongs in your portfolio?

Brookfield Renewable Energy Partners, Smart REIT, and Domtar represent three of the best dividend-paying investment opportunities in their respective industries. All long-term investors should take a closer look and consider buying at least one of them to add yield and further diversify your portfolios.

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 Joseph Solitro has no position in any stocks mentioned.

More on Dividend Stocks