Want to Earn More Money? Buy and Hold These Dividend Stocks Yielding Up to 7.7%

How high-yield dividend stocks like Inter Pipeline Ltd (TSX:IPL) can supplement your income.

| More on:

Who doesn’t like passive income? Make your money work for you by buying dividend stocks. Dividends not only supplement your income, but dividend-paying stocks have also historically outperformed non-dividend paying companies.

When choosing dividend stocks, you’ll likely go for high-yield stocks, but they’re only worthwhile if the underlying companies look strong enough to be able to support the dividend payout and yield. Here are three such high-yield stocks that should earn you well.

Inter Pipeline Ltd (TSX:IPL)

Inter Pipeline is among Canada’s largest energy infrastructure companies that transports, stores, and processes petroleum and natural gas liquids.

Inter Pipeline pays a monthly dividend with an incredibly strong dividend history: it has distributed nearly $5.3 billion in dividends since inception and increased its dividend every for 10 consecutive years now. Its absolute annual dividend amount has doubled over the period.

Between 2014 and 2019, Inter Pipeline’s dividends would’ve grown at a compound annual rate of 5.3%. That’s commendable for a commodity-based business, and the company has been able to pull it off thanks to heavy reliance on fee-based and cost-of-service cash flows.

In 2018, Inter Pipeline’s funds from operations hit a record high of $1.1 billion, positioning it well to hike dividends year after year. Steady mid-to-high single-digit dividend growth and a hefty yield of 7.7% make Inter Pipeline a great dividend stock to own.

Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM)

Canadian Imperial Bank of Commerce (CIBC) is one of the “Big Five” Canadian banks, but it also has the highest exposure to Canada’s housing market given the large size of its domestic operations versus international.

Yet, CIBC has a strong asset base, a comfortable capital ratio and has consistently generated double-digit returns on equity. Moreover, the bank has survived many storms over the years. CIBC has not missed a single dividend payment since 1868 (yes, the company is that old) and has grown its dividend at a compound annual rate of 4.9% in the past 15 years.

CIBC aims to maintain a comfortable dividend payout of 40-50%, grow annual earnings per share by 5-10% and earn at least 15% returns on equity in the medium term.

These goals, coupled with CIBC’s strong dividend track record, indicate that the bank’s dividends are safe. Investors can expect dividends to grow over time while enjoying a dividend yield of 5.3%.

Chorus Aviation Inc. (TSX:CHR)

Chorus Aviation is primarily into aircraft leasing services and provides contract flying for Air Canada.

Earlier this year, Chorus extended its capacity purchase agreement with Air Canada by 10 years through 2035. It also recently added one of India’s leading airlines, SpiceJet, to its customer base, having struck a deal to deliver five Bombardier Q400 aircraft on a sale and leaseback basis.

With that, Chorus’ third-party aircraft-leasing business, Chorus Aviation Capital’s (CAC), portfolio has grown to 45 aircraft worth nearly US$960 million.

These deals, especially with Air Canada, should generate enough cash flows for Chorus to support dividends. A free-cash-flow payout well below 50% already leaves enough room for the company to pay regular dividends. Chorus currently pays a fixed monthly dividend of $0.04 per share and yields 6.7%.

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 Neha Chamaria has no position in any of the stocks mentioned. Chorus is a recommendation of Dividend Investor Canada.

More on Dividend Stocks

concept of real estate evaluation
Dividend Stocks

Why the Market Should Stop Hating on This Reliable REIT

You can get a lot of dividend income with an investment in Northwest Healthcare Properties REIT (TSX:NWH.UN).

Read more »

TFSA (Tax-Free Savings Account) on wooden blocks and Canadian one hundred dollar bills.
Dividend Stocks

Max Your TFSA Impact: 4 Dividend Stocks to Buy and Hold Forever

Adding these TSX dividend stocks to your TFSA can maximize your portfolio's income potential and compound your returns over time.

Read more »

man touches brain to show a good idea
Dividend Stocks

This 6% Yield Has Survived Every Market Crash Since 1995

This top TSX stock boasts a yield of over 6% and a dividend track record that has weathered every market…

Read more »

Income and growth financial chart
Dividend Stocks

This Canadian Retail Stock Yields 3.8% and Keeps Expanding

A growing dividend, rising share price, and big strategic moves make this top Canadian retail stock worth owning for the…

Read more »

Forklift in a warehouse
Dividend Stocks

It’s Possible! Build a $250,000 TFSA Using Just 2 Dividend Stocks

Want a $250,000 TFSA that pays out monthly? These two solid REITs pay monthly distributions.

Read more »

Two senior friends playing beat tennis on sand tennis court
Dividend Stocks

2 Canadian Stocks to Buy and Hold for a Lifetime

These Canadian stocks have the strength to reward patient investors for decades – no matter what the market brings.

Read more »

resting in a hammock with eyes closed
Dividend Stocks

1 Canadian Utility Stock That’s My Ultimate Sleep-Well-At-Night Pick

Its defensive business and predictable earnings position it to deliver steady, long-term returns, helping you sleep well at night.

Read more »

A worker uses a laptop inside a restaurant.
Dividend Stocks

Dream of Owning a Restaurant? These 2 Food Stocks Are a Far Savvier Investment

Kitchen nightmares exist for a reason. These TSX restaurant royalties are better picks.

Read more »