Whether it’s saving up for a vacation in Cabo, that cool new smartphone, or paying off crippling student debt, millennials can always use a bit of extra coin in their coffers. And if you’re reading this, you probably already know about the benefits of a passive income stream through the myriad of dividend-paying stocks and ETFs that are currently trading in the markets.
But let’s be honest: dividend stocks have a stigma of being, well, boring. So, instead of the same, old, plain vanilla utility or bank that your parents have in their RRSPs, here are some exciting yield payers for the younger generation.
Instead of a large-cap oil name, go with Vermilion Energy Inc. (TSX: VET)(NYSE: VET), a fast-rising mid-cap oil and gas producer with assets across North America, Europe, and Australia.
There are four reasons why I would pick Vermilion over a run-of-the-mill oil name. First, it pays a hefty 4.51% yield (which it has never cut, even when oil hit $30/bbl). Second, because it’s smaller, Vermilion will outperform the bigger names as oil recovers. Third, it boasts some of the best netbacks, or margins, in its class. Finally, the company implemented excellent cost-cutting measures and ramped up production during the oil downturn; it’s now poised to rebound with oil.
Instead of an overpriced Vancouver or Toronto house, go with H&R Real Estate Investment Trust (TSX: HR.UN), a large-cap, diversified REIT with assets in Canada and the U.S. Currently, H&R is trading at a discount to its NAV per share of $24.50, while boasting a 6% yield (significantly higher than the peer average of 4.5%). H&R also possesses an excellent balance sheet and growth opportunities through retail- and multi-family-unit expansion in the U.S.
Instead of a Big Five bank, go with Callidus Capital Corp. (TSX:CBL). Just like the beautiful Rocky Mountains, the boring Canadian banks will always exist. But Callidus won’t, and that’s because it might be taken private this year at a significant premium to its current share price. Moreover, this small-cap, non-traditional lender is paying out nearly 6% with a net interest margin around 11% (the big banks make around 2% in comparison) and ROE of 15.7% year to date.
Instead of a boring utility, go with Telus Corporation (TSX: T)(NYSE: TU). Telus currently pays a safe yield of 4.41%, while growth drivers will come by way of next-gen “PureFibre” high-speed internet. Furthermore, one quality of Telus that should sit well with millennials is the company’s focus on environmentally friendly, sustainable strategies which are well recognized in the industry; this is especially impressive given that the company’s operating metrics are on par, or better, than its competitors in the telecom space.
Finally, let’s wrap it up with some tech via First Trust NASDAQ Technology Dividend Index Fund (NASDAQ: TDIV). With core holdings in U.S. tech heavyweights such as Apple, Intel, and Microsoft, you can generate a nice 2.42% yield, while “future proofing” your yield portfolio through a who’s who of technology.
So, there you have it, millennials. Who says making money has to be a snooze fest? Instead of sticking with boring and bland blue chips, why not track slightly off the beaten path and pick up some lesser-known names (Okay, so Telus is not exactly a small cap), while also getting exposure to the best companies in the world?
