Do you want to get market-beating returns in your TFSA or RRSP while getting cash payouts to boot?
If so, dividend stocks are what the doctor ordered. Not only do top dividend stocks offer better yields than bonds, they also offer the potential to enjoy those sweet stock market gains. Although dividend stocks can’t compete with early-stage growth stocks in terms of returns, they perform better than many classes of stocks that don’t pay dividends. Additionally, the fact that a stock pays dividends usually means its earnings history is fairly stable, so it provides a measure of safety to boot.
Right now, dividend yields between 2% and 4% are common on the TSX, and even low yields like that would put you well ahead of bank interest. However, it’s possible to do much better. Right now, there are dozens of dividend stocks on the TSX that yield 6% or higher. Some of them also boast some impressive long-term returns. The following are just three of those stocks that have steady dividend payouts you can count on for years to come.
TransAlta Renewables (TSX:RNW)
TransAlta Renewables is a renewable energy company that provides power to customers across Canada and in Australia. As an energy stock that focuses on renewables, it lets you play the energy sector without worrying about oil prices. TransAlta has a steady earnings track record, having grown net income by 180% year over year in its most recent quarter. The stock also pays a generous dividend that yields 7.26% as of this writing.
Enbridge is an energy infrastructure company that operates a number of pipelines across the U.S. and Canada. As a transportation company, it’s somewhat vulnerable to the regulatory and political issues that have plagued similar companies like TC Energy. However, the company is also enjoying phenomenal growth, having increased EPS by 300% in its most recent quarter. That earnings jump sent the stock soaring this year, but Enbridge shares are still cheap enough to yield 6%.
If you’re interested in this 6% yielder, you’ll want to act fast though: as of this writing, the yield was exactly 6%, so even a slight jump in the stock price could put it below the threshold.
Laurentian Bank (TSX:LB)
Laurentian is a small bank that operates nationwide and has a particular stronghold in Quebec. The stock has fallen on some hard times recently, with earnings having slid in its most recent quarter. However, the stock is still an ultra-high yielder with a relatively low payout ratio. As of this writing, Laurentian shares yielded 6.31%, making them the highest yielding of all Canadian bank stocks. And even with earnings falling a little, the yield is sustainable, as the bank’s payout ratio is a comfortable 56%.
The Big Six banks are probably safer bets than this stock, but if it’s income you’re going for, Laurentian is a solid play.
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Stock #1 is a household name – a one-time TSX blue chip that too many investors have left sitting idly in their accounts, hoping the company’s prospects will improve (especially after one more government bailout).
Still, our analysts rate this company a firm SELL.
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Fool contributor Andrew Button has no position in any of the stocks mentioned. Enbridge is a recommendation of Stock Advisor Canada.