The Motley Fool

Income Investors: 2 High-Yield Stocks That Should See Big Dividend Hikes in 2018

Canadian dividend investors are always searching for quality income stocks that have the potential to raise their distributions every year.

Once in a while, the market provides an opportunity to pick up such names at attractive prices, while offering above-average yields.

Let’s take a look at Enbridge Inc. (TSX:ENB)(NYSE:ENB) and Altagas Ltd. (TSX:ALA) to see why they might be interesting picks.


At the time of writing, Enbridge is down 16% in 2017, and that’s after a multi-day mini-rally that saw the stock jump from $44 to $47.50 per share.

Bottom feeders who picked the stock up at the recent low are all smiles, but the opportunity still exists to get in at a reasonable price and secure an attractive 5.1% yield.

Enbridge has had a busy year, with its $37 billion purchase of Spectra Energy. The Spectra deal, which closed in early 2017, added important gas assets and provided a nice boost to the near-term capital plan.

In fact, Enbridge has about $31 billion in commercially secured developments on the go that should translate into a nice increase to revenue and cash flow in the medium term.

In the Q1 2017 earnings report, Enbridge said it expects to deliver annual dividend growth of 10-12% through 2024, as the new assets are completed and go into service.

The statement was omitted from the Q3 report, which might be why investors initially sold the stock. It was just announced that dividend growth won’t hit the top end of the target, but investors should still see attractive increases in the coming years, and they can already pick up a great yield.


Some pundits view Altagas as a mini-Enbridge.

The company has gas, utility, and power assets in Canada and the United States, and it continues to grow through a mix of strategic acquisitions and organic projects.

The big play this year is the purchase of Washington, D.C.-based WGL Holdings for $8.4 billion.

Investors are concerned Altagas might not be able to sell some non-core assets at targeted prices to help pay for the deal. The coming months will tell, but management expects the acquisition to close in the first half of next year, and the company is anticipating annual of dividend increases of at least 8% for 2019-2021. Investors could see a hefty rise in 2018 as well.

The existing assets are performing as expected, and Altagas just bumped up the dividend by 4%, so management can’t be overly concerned about the revenue and cash flow outlook.

The stock has bounced off the lows of the year, but is still down 13% in 2017 and offers a juicy 7.4% yield.

The bottom line

Once in a while, income investors get a treat, and Enbridge and Altagas are just two of the attractive stocks out there that deserve a closer look today.

Just Released! 5 Stocks Under $49 (FREE REPORT)

Motley Fool Canada's market-beating team has just released a brand-new FREE report revealing 5 "dirt cheap" stocks that you can buy today for under $49 a share.
Our team thinks these 5 stocks are critically undervalued, but more importantly, could potentially make Canadian investors who act quickly a fortune.
Don't miss out! Simply click the link below to grab your free copy and discover all 5 of these stocks now.

Claim your FREE 5-stock report now!

Fool contributor Andrew Walker owns shares of Enbridge and Altagas. The Motley Fool owns shares of Enbridge. Enbridge and Altagas are recommendations of Stock Advisor Canada.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss an important event.

Iain Butler and the Stock Advisor Canada team only publish their new “buy alerts” twice a month, and only to an exclusively small group.

This is your chance to get in early on what could prove to be very special investment advice.

Enter your email address below to get started now, and join the other thousands of Canadians who have already signed up for their chance to get the market-beating advice from Stock Advisor Canada.

I consent to receiving information from The Motley Fool via email, direct mail, and occasional special offer phone calls. I understand I can unsubscribe from these updates at any time. Please read the Privacy Statement and Terms of Service for more information.