3 Safe Dividends Yielding at Least 4.8%

Bank of Nova Scotia (TSX:BNS)(NYSE:BNS), TransCanada Corporation (TSX:TRP)(NYSE:TRP), and Telus Corporation (TSX:T)(NYSE:TU) all have big dividends you can count on.

| More on:
The Motley Fool

As stock prices continue to fall, there is an upside: stocks are much cheaper than they once were. And, as a result, high-yielding dividends become easier to find.

On that note, below are three safe dividends yielding at least 4.8%.

1. Bank of Nova Scotia

If you’re looking for safe dividends, the big banks are a great place to start. In fact, none of them have cut their payouts since World War II.

There are some simple reasons for this. The banks face limited competition, which makes for relatively steady profits. They are conservatively managed. And perhaps most importantly, they only pay out 45-50% of their income to shareholders. So even if profitability suffers, the dividend is still affordable.

Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) has seen its shares lag over the past couple of years primarily due to weakness in the Canadian economy and in energy. But no one is suggesting a dividend cut is possible, and the payout now yields a healthy 5.4%.

2. TransCanada

There are plenty of reasons to dislike TransCanada Corporation (TSX:TRP)(NYSE:TRP). Most notable has been the collapse in energy prices, and to make matters worse it has become harder to get new pipelines approved.

But TransCanada has one big advantage over energy producers. Its pipelines are generally secured by long-term contracts, which leaves the company relatively unexposed to commodity prices. This means that revenue and cash flow tend to be quite steady. Furthermore, TransCanada has $14 billion of visible, near-term growth projects.

The company plans to grow its dividend by 8-10% per year out to 2020, but it still has a yield of 4.8%. That combination isn’t easy to find.

3. Telus

Canada’s Big Three telecommunications providers make for great dividend payers. After all, they face limited competition, are protected by high barriers to entry, and make subscription-based revenue. As a result, cash flow tends to be very smooth, which is perfect for paying a big dividend.

Telus Corporation (TSX:T)(NYSE:TU) is the best positioned of the Big Three. It has the highest customer satisfaction scores, the most exposure to growth products (such as wireless and Internet), and the best financial results.

Recent concerns about a fourth competitor have hampered Telus’s stock price, and as a result the company’s dividend yields 4.8%. Keep in mind that Telus is a growing company and only pays about three-quarters of its income to shareholders. So the chances of a dividend cut are very remote. Instead you will probably see more dividend hikes down the line.

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 Benjamin Sinclair has no position in any stocks mentioned.

More on Dividend Stocks

stock research, analyze data
Dividend Stocks

How Much to Invest to Get $500 in Dividends Every Month

TSX dividend stocks such as Enbridge, TD Bank, and Telus, can help you earn $500 in monthly dividend payments.

Read more »

Golden crown on a red velvet background
Dividend Stocks

Dividend Powerhouses: Canadian Stocks to Fuel Your Portfolio

These two top Canadian dividend aristocrats are some of the top stocks on the TSX to buy now and hold…

Read more »

Dial moving from 4G to 5G
Dividend Stocks

This Undervalued Dividend Stock is Worth Buying Right Now

Want an undervalued dividend stock with long-term potential and a juicy yield? Here's an option you may regret not buying…

Read more »

A worker gives a business presentation.
Dividend Stocks

1 Stock I’m Buying Hand Over Fist in July Despite the Market’s Pessimism

This top dividend stock is going through a rough patch, but don't let that count out all the growth we've…

Read more »

person on phone leaning against outside wall with scenic view at airbnb rental property
Dividend Stocks

2 TSX Stocks Poised to Have a Big Summer

Restaurant Brands International (TSX:QSR) stock and another darling that could be too cheap to ignore this summer.

Read more »

Dividend Stocks

Forget Fortis Stock: Buy This Magnificent Utilities Stock Instead

Looking for high dividends and returns? Then I'm sorry, but Fortis (TSX:FTS) stock probably isn't for you.

Read more »

Increasing yield
Dividend Stocks

2 High-Yield (But Slightly Risky) Stocks to Keep Your Eye on

Have these top TSX dividend stocks finally bottomed?

Read more »

Target. Stand out from the crowd
Dividend Stocks

2 Dividend Stocks I’d Buy if They Fall a Bit

Any near-term decline in these two top Canadian dividend stocks will make them look even more attractive.

Read more »