Cautious Investors: 3 Safe Stocks With Growth Potential

Canadian Natural Resources Ltd. (TSX:CNQ)(NYSE:CNQ), Power Financial Corp. (TSX:PWF), and Vermilion Energy Inc. (TSX:VET)(NYSE:VET) are three of the safest, high-dividend-paying stocks on the TSX today.

| More on:
potted green plant grows up in arrow shape

Image source: Getty Images

Stocks that are less widely held are usually undependable, if not risky investments. Blue-chip stocks are highly preferred because of the history of earnings and sustainable dividends. However, there are companies that are not in the league of blue-chip stocks but are extremely reliable investments.

Canadian Natural Resources (TSX:CNQ)(NYSE:CNQ), Power Financial (TSX:PWF), and Vermilion Energy (TSX:VET)(NYSE:VET) are included in my list of special and gilt-edged stock investments. All three are safe investments with growth potential.

Canadian Natural Resources

This energy stock enjoyed moderate gain at the close of the second quarter. The shares of Canada Natural Resources are up 9.42% year to date, but the price won’t stay at $35.31 for long. Analysts see an uptrend developing and are now forecasting a potential upside of 55.76% in the next 12 months.

The $42 billion oil and gas company has delivered an average net income of $2.5 billion in the last two years on average and total revenue of $19.1 billion. Prior to 2017, the company had huge losses that prompted fundamentals to weaken.

Despite two years of adversity, CNQ is regarded by investors as a fabulous stock. The oil and gas company is a dividend payer that boasts of an impressive history of delivering market-beating returns. Canadian Natural Resources has grown dividend for 17 consecutive years.

If you’re saving up for the future, this is one Canadian oil and gas stock you can hold for five years and beyond. The dividend is safe and sustainable — especially now with stronger fundamentals.

Power Financial

The financial services company is suited for income chasers, prospective retirees, and newbie investors. A high dividend yield and an excellent track record of paying dividends make Power Financial a dependable source of passive income.

Are the dividends safe, or can the company sustain paying dividends of 4.8%? The company has paid a total of $10 billion in dividends over the last 10 years. Growth in dividends per share for the same period is 32%. Power Financial’s payout ratio is a healthy 57.15%.

There is plenty of room to earmark a larger portion of income as dividends. However, the company has maintained 2.7% in annual growth in dividends. That’s a bit conservative and not a high growth rate.

I’d rather opt for a stock that pays consistent and predictable dividends. But I would certainly welcome an increase in dividend payments when business is growing.

Vermilion Energy

The oil and gas company is one of the great comeback stories in 2018. From $62.5 million in 2017, net earnings zoomed to $271.6 million, or a 334.5% increase the next year. Many investors are invested in Vermilion Energy because of the very high 9.7% dividend yield.

Vermilion started paying dividends in 2003 and has achieved a consistent record of better-than-market performance over 20 years. Dividends increased four times and not once were reduced. At $28.45, the stock is a solid buy with price projected to soar by 75.7% within the next four quarters. Don’t wait for the herd and buy now.

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 Christopher Liew has no position in any of the stocks mentioned.

More on Dividend Stocks

Businessman holding tablet and showing a growing virtual hologram of statistics, graph and chart with arrow up on dark background. Stock market. Business growth, planning and strategy concept
Dividend Stocks

TFSA Magic: Earn Enormous Passive Income That the CRA Can’t Touch

If you're seeking out passive income, with zero taxes involved, then get on board with a TFSA and this portfolio…

Read more »

Man with no money. Businessman holding empty wallet
Dividend Stocks

2 Stocks Under $50 New Investors Can Confidently Buy

There are some great stocks under $50 that every investor needs to know about. Here’s a look at two great…

Read more »

think thought consider
Dividend Stocks

Down 10.88%: Is ATD Stock a Good Buy After Earnings?

Alimentation Couche-Tard (TSX:ATD) stock might not be the easy buy-case it once was. Here’s a look at what happened.

Read more »

money cash dividends
Dividend Stocks

TFSA Dividend Stocks: Earn $1,200/Year Tax-Free

Canadian stocks like Fortis are a must-have in your portfolio to earn tax-free yields for decades.

Read more »

sale discount best price
Dividend Stocks

1 Dividend Stock Down 11 Percent to Buy Right Now

Do you want a great dividend stock down 11% that can provide years of growth potential? Here's one heavily discounted…

Read more »

Growth from coins
Dividend Stocks

1 Grade A Dividend Stock Down 11% to Buy and Hold Forever 

If you're looking for the right dividend stock at the right price, you're going to want to consider this insurance…

Read more »

Target. Stand out from the crowd
Dividend Stocks

2 Dividend Stocks to Double Up on Right Now

Are you looking for dividend stocks to buy right now? Here are two top picks!

Read more »

edit Taxes CRA
Dividend Stocks

Tax Time: How to Keep More of Your Money

Nearly everyone hates paying taxes, although Canadians can lessen the financial pain with the right tax strategies.

Read more »