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2 High-Yield Stocks for Dividend Investors

The latest correction in the Canadian stock market is giving income investors a chance to pick up attractive dividend stocks at rock-bottom prices.

It is also showing the value of holding some defensive names that actually benefit in the current environment.

Let’s take a look at two stocks that might be interesting picks for your dividend portfolio.

Bank of Nova Scotia

Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) trades at $69 per share compared to $78 last August and a 2018 high around $84.

Investors might be dumping the stock amid fears that its large exposure to Latin America could put it at a greater risk of losses in the event the global economy tanks.

Emerging markets certainly carry more risks, but the pullback might be overdone right now.

Bank of Nova Scotia’s international operations account for about a third of total profits and the Latin American business is performing well. The bank remains very profitable and a series of acquisitions made last year should help drive revenue and earnings growth.

At the current multiple of about 10 times trailing earnings, the stock should be attractive, and investors can pick up a solid 5% yield while they wait for the market to stabilize.

BCE

Falling interest rates and plunging bond yields suggest global investors are concerned about a widespread economic downturn.

This has hit the share prices of many companies that rely on international trade or are very sensitive to disruption in global financial markets. However, other stocks are seeing benefits from turbulence, and BCE (TSX:BCE)(NYSE:BCE) is one of those companies.

Lower interest rates and falling bond yields bode well for BCE, as it uses a significant amount of debt as part of its funding strategy to build out and upgrade its world-class wireless and wireline networks. As the cost of borrowing decreases, the amount of cash flow available for distributions potentially rises.

Low interest rates also drive yield-seeking investors out of fixed-income assets and into reliable dividend stocks. BCE’s distribution is about as safe as you can get in the Canadian market, and its 5% yield is significantly higher than any return offered on a GIC right now.

BCE just reported strong Q2 2019 results. Net earnings increased 8.2% to $817 million compared to the same period last year, and free cash flow rose 10% to $1.1 billion.

This supports ongoing dividend hikes and suggests BCE is on track to hit its 2019 free cash flow growth guidance of 7-12%.

The stock trades at $61 today compared to $53 at this time last year. The all-time high is about $63.

The bottom line

Bank of Nova Scotia appears oversold right now and offers attractive upside potential on an improvement in market sentiment. BCE is proving its value as a defensive play to ride out turbulent markets and should continue to deliver above-average yield.

Both stocks deserve to be on your radar right now for a buy-and-hold dividend portfolio.

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Fool contributor Andrew Walker owns share of BCE. Bank of Nova Scotia is a recommendation of Stock Advisor Canada.

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