It can sometimes be difficult to know which direction a stock will go. However, when it comes to dividend stocks, as long as their business remains sound and profitable, you can at least be reasonably certain of the dividend income that you’ll earn from them. And so even if the stock might be down in the short term, you can wait for a recovery and generate a steady stream of income while doing so.
That’s one of the reasons that dividend stocks can be so appealing, because they can help offset some of the risks you might otherwise be exposed to when investing. The stocks listed below are two great options for dividend investors to add to their portfolios as they can be good sources of recurring income.
Algonquin Power & Utilities (TSX:AQN)(NYSE:AQN) might just be one of the best investments you can make on the TSX. With a strong dividend and lots of growth over the years, it gives investors the best of both worlds with the ability to earn a good return from the stock in multiple ways. Acquisitions have helped Algonquin grow over the years, and with strong free cash flow, there will be many opportunities for the company to do more of that in the future.
The great thing for investors to see is that not only have sales for Algonquin more than doubled since 2014, but profits have tripled during that time. A big part of the reason for Algonquin’s strong bottom line is that its operating margin has improved over the years, from just under 15% five years ago to 23% this past year. By keeping its operations strong, the company gives itself a great chance to be profitable each and every quarter. And investors have taken notice, as the share price for Algonquin stock has doubled in five years.
As an added bonus, the stock also pays an attractive dividend, which was recently increased as well. With a yield now of 3.5%, Algonquin stock will produce a lot of income for investors that hold the investment for many years.
Rogers Sugar (TSX:RSI) is another good stock that investors can count on to produce passive income for them. While the stock may not offer the same attractive growth opportunities that Algonquin does, it gives investors a bit more stability and predictability. Over the past year, Rogers Sugar’s share price has traded within a narrow range of just $1. And while investors might say that makes the stock uninteresting and boring, those are good features when it comes to investments.
Being able to buy and forget is something that’s very valuable for stocks. You shouldn’t have to keep updating and refreshing the stock price every day and hour just to make sure your money is safe. And that’s what Rogers Sugar can do for investors; with its beta of just 0.54, it won’t go on any big swings in value. Dividends have also been stable in recent years, and with a yield of 6.3%, investors would be more than happy to see that trend continue.
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 David Jagielski has no position in any of the stocks mentioned.