3 Defensive Stocks for Safe Dividends

Get above-average dividends from safe stocks, such as Sienna Senior Living Inc. (TSX:SIA).

| More on:
Shopping card with boxes labelled REITs, ETFs, Bonds, Stocks

Image source: Getty Images.

The Canadian market, using iShares S&P/TSX 60 Index Fund as a proxy, only offers a yield of about 2.3%. Here we have three defensive stocks that offer bigger but safe dividend yields.

Sienna Senior Living (TSX:SIA) is one of the largest owners of senior housing in Canada, and the largest licensed long-term care provider in Ontario. Specifically, it owns 70 high-quality residences with about 10,100 beds and 15 managed residences with about 1,700 beds.

Over the years, Sienna has steadily transformed its portfolio to increase the private-pay mix of its net operating income. Since 2010, Sienna has reduced its government-funded net operating income mix from 94% to roughly 56% in Q2.

By 2020, management is aiming for a 50/50 net operating income mix between private pay and government funded. The private-pay portion is subject to market-driven rates and has a higher margin, which allows Sienna to be more profitable.

Sienna should continue to experience stable demand from a growing aging population. Meanwhile, investors can get a safe monthly dividend. At about $17.40 per share as of writing, Sienna offers a yield of roughly 5.3%. It last increased its dividend by 2% in August.

BCE (TSX:BCE)(NYSE:BCE) is the largest communications company in Canada. It has wireline, wireless, and media business segments, which contribute about 54%, 35%, and 11%, respectively, of its revenue.

BCE’s growth is largely attributable to the growth from its wireless and high-speed internet businesses. In the first half of the year, BCE increased its revenue by 3.2% compared to the same period in 2017.

However, this hasn’t translated to its bottom line growth. As a result, this has led to a 14% decline in its stock price year to date.

That said, BCE’s dividend is still safe. It last increased its dividend by 5.2% in February. At about $52 per share as of writing, BCE offers a yield of roughly 5.8%.

Fortis’ (TSX:FTS)(NYSE:FTS) regulated nature makes it a top choice for conservative income investors. Higher interest rates have chased money out of utility names such as Fortis. This gives investors the opportunity to buy the stock now at attractive valuations that we haven’t seen since late 2009.

With its five-year capital plan of about $15 billion, Fortis believes an average dividend growth rate of 6% is possible through 2022. This will add to the +40-year dividend growth streak that Fortis already has. At about $42 per share as of writing, Fortis offers a yield of about 4%.

Investor takeaway

Sienna, BCE, and Fortis offer safe dividend yields of 4-6%.

Which of the three is the best bang for your buck? The analyst consensus from Thomson Reuters thinks Fortis is the best value with the most upside potential of about 15% over the next 12 months.

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 Kay Ng has no position in any of the stocks mentioned.

More on Dividend Stocks

thinking
Dividend Stocks

Should You Buy BCE Stock for its 8.6% Dividend Yield?

Down over 20% from all-time highs, BCE stock offers you a tasty dividend yield in 2024. But is the TSX…

Read more »

grow dividends
Dividend Stocks

How Long Would It Take to Turn $20,000 Into $100,000 With TSX Dividend Stocks?

Here's how high-quality TSX dividend stocks and the power of compound interest can help grow your investments by 400% or…

Read more »

Paper airplanes flying on blue sky with form of growing graph
Dividend Stocks

2 Soaring Stocks I’d Buy Now With No Hesitation

These two stocks may be the most expensive on the market, but they're high for a reason! And I'm still…

Read more »

Hour glass and calendar concept for time slipping away for important appointment date, schedule and deadline
Dividend Stocks

Invest $374.50 Each Month to Create Passive Income of $288 in 2024

Investing a specific amount each month to create passive income this year is possible with monthly dividend payers.

Read more »

Happy retirement
Dividend Stocks

2 Stocks to Help Turn $100,000 Into $1 Million

If you want to reach $1 million, $100,000 can certainly get you there. Even if you invest in some low…

Read more »

warning or alert
Dividend Stocks

Income Alert: These Stocks Just Raised Their Dividends

There's no shortage of companies that raised their dividends recently. Here's a trio of options to consider buying now.

Read more »

Business success with growing, rising charts and businessman in background
Dividend Stocks

Don’t Look Now, But These 3 TSX Stocks Look Poised for a Nice Rally 

Three TSX stocks are in a downtrend amid headwinds. 2024 may be rocky for them, but they are poised for…

Read more »

protect, safe, trust
Dividend Stocks

3 Safe Dividend Stocks to Beat Inflation

These three dividend stocks are excellent buys to beat inflation, given their solid underlying businesses and high yields.

Read more »