Income Investors: 4 Low-Volatility Stocks Yielding Over 4%

One of the challenges of income investing is balancing the need for current yield without putting your capital at risk. These four stocks, including Enbridge Income Fund Holdings Inc. (TSX:ENF), offer dividend yields over 4% and belong to the S&P/TSX Composite Low Volatility Index.

| More on:
The Motley Fool

One of the challenges of income investing is balancing the need for current yield without putting your capital at risk.

These four stocks offer current yields of over 4% and are included in the S&P/TSX Composite Low Volatility Index, meaning the risk of losing capital, even in the short term, is lower than that of the overall market.

CI Financial Corp. (TSX:CIX)

CI is one of Canada’s largest wealth management firms, offering mutual funds, ETFs, segregated funds, and individual investment advice.

CI’s business is healthy today with assets under management up 11.5% year over year for the most recent period, and sales expected to climb about 5% annually for the next two years.

CI shares pay an attractive yield of 5.1% with the company increasing its payout by 2.2% this year. The company has a beta of 0.67, implying a low cost of capital of just 7.5%.


BCE provides fixed-line, wireless, and media solutions to residential, business, and wholesale customers across Canada.

BCE has an exemplary track record of operating performance, having posted a net profit in each of the past 10 years.

Shares pay a dividend of 4.8% today, and with sales forecast to grow by 4.7% and 2% over the next two years, respectively, there’s a good chance the company will be able to increase its payout going forward.

Algonquin Power & Utilities Corp. (TSX:AQN)(NYSE:AQN)

Algonquin is a renewable energy and utility company with interests in hydroelectric, wind, thermal, and solar power facilities in addition to 32 utility distribution operations.

Algonquin shares are up more than 12% compounded annually over the past 10 years, offering investors a steady capital return in addition to the company’s current dividend yield of 4.1%.

Trading at a price-to-book ratio of 1.9 times, Algonquin may appeal to value investors; however, the company’s payout ratio, sitting at over 150% and persistent free cash flow deficits are reason for caution.

Enbridge Income Fund Holdings Inc. (TSX:ENF)

Enbridge is designed to appeal to investors seeking reliable and predictable cash returns from low-risk energy infrastructure assets, including green power-generation facilities, liquids transportation, and storage facilities.

Enbridge shares have given back some of their gains this year with shares down 6.5% year to date, despite being up 42% over the past 18 months, offering an attractive entry point.

The company pays a dividend yield of 6.1%, the highest of the four stocks on this list. Meanwhile, shares trade at just 1.2 times book value and a forward P/E of 13.5 times, both well below the company’s historical averages.

Which should you buy?

Each of the four stocks come from different sectors of the market, meaning that all four could be included in the same portfolio without risk of over-concentration.

CI Financial and BCE would be more favoured for their current yields, while investors may not expect any significant increases to the payout in the near future, meaning they are more yield plays than dividend growers.

Algonquin and Enbridge, meanwhile, have been more aggressive in increasing their dividends in recent years; however, both have payout ratios which are near or above 100%, meaning investors will need to carefully evaluate the sustainability of their dividends before making a purchase.

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 Jason Phillips has no position in any stocks mentioned.

More on Dividend Stocks

grow money, wealth build
Dividend Stocks

Got $3,000? 3 TSX Growth Stocks to Buy in January 2023

Top TSX growth stocks that look appealing for 2023.

Read more »

woman data analyze
Dividend Stocks

Need Passive Income? Turn $15,000 Into $851 Annually

This passive-income stock is already climbing higher, up 16% in the last three months! Yet it's still valuable, so you…

Read more »

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

Retirees: 3 Reliable Canadian Dividend Stocks to Buy Now for Passive Income

Top TSX dividend stocks now appear oversold.

Read more »

Dividend Stocks

For $100 in Passive Income Each Month, Buy 1,500 Shares of This REIT

REITs such as Northwest Healthcare can enable investors create a passive-income stream as well as benefit from capital gains.

Read more »

A colourful firework display
Dividend Stocks

2 Canadian Growth Stocks (With Dividends) to Start 2023 With a Bang

Here are two of the best dividend-paying Canadian growth stocks you can invest in at the start of 2023 and…

Read more »

sale discount best price
Dividend Stocks

4 Insanely Cheap Canadian Stocks to Buy for Passive Income

The recent bear market has created some incredible bargains, especially for those looking for passive income. Here are four cheap…

Read more »

A bull outlined against a field
Dividend Stocks

3 Cheap Stocks I’d Buy Before the Bull Market Arrives

Undervalued TSX stocks such as Savaria and Well Health can help investors generate market-beating gains when markets recover.

Read more »

Increasing yield
Dividend Stocks

5 Canadian Dividend Stocks With Yields of 4% or More

If you want dividends that yield over 4%, you don't have to look far. Here are five large-cap Canadian stocks…

Read more »