3 Dividend Studs to Supercharge Your Nest Egg

BTB Real Estate stock, TransAlta Renewables stock, and Capital Power stock are three high-yield dividend stocks to help you build a giant nest egg.

| More on:
A golden egg in a nest

Image source: Getty Images.

Making a sizable enough nest egg should be on every investor’s agenda. Whether you want it as your retirement plan or as a safety net, if the short-term investments turn to losses, having a decent enough sum tucked away is important. BTB REIT (TSX:BTB.UN), TransAlta Renewables (TSX:RNW), and Capital Power are three dividend studs to consider for your nest egg.

A small REIT

With a market cap of $300 million, BTB is among the smallest REITs in the country. The company is currently operating in eastern Canada and owns a total of 66 commercial, industrial, and office properties.

This small REIT has a large dividend yield — 8.73%. The company has kept its dividend payouts steady since 2015, paying $0.42 per share. A payout ratio of 65.53% is also very sustainable and unusually low for an REIT with such a high dividend yield.

The current market value of the company is $4.85 per share. It’s an almost 13% increase in the last three years. A low trailing price-to-earnings ratio of 6.12 compared to the real estate sector, and a price-to-book value of 0.9 indicates an undervalued stock. It might be time to fill up your TFSA with this high-yield company.

Clean and green energy

TransAlta Renewables is a subsidiary of TransAlta and has a market cap of $3.89 billion. The company operates three major property types, hydropower plants, wind farms, and gas power plants. The company has many long-term power-purchase agreements in the country as well as in the U.S., which will keep the business flourishing for years to come.

TransAlta Renewables is a Dividend Aristocrat with a history of increasing dividends for five consecutive years. The current dividend yield is a juicy 6.43%. With a beta of 1.21, the company seems relatively stable.

The company’s growth is also a major factor to consider. Over the last three years, the company has increased its market value by more than 13%. The growth this year has been even more substantial at almost 30%. At the current market value of $14.68 per share, the company is trading near its fair value.

Underdog of the power sector

With a $3.42 billion market cap, Capital Power is one of the smaller players in the power sector. The company has a total of 25 facilities in the country and the U.S. Employing coal, solar energy, wind, natural gas, and waste heat, the company produces nearly 6,000 MW.

As another Dividend Aristocrat, Capital Power has increased its dividends for five consecutive years. The yield right now is a decent 6%. Even as the lowest of the three on this list, this yield has the potential to pay back your initial investment in under 17 years with just payouts.

The company has grown around 58% in the last three years. If it keeps the same pace, your investment will double in a matter of five years. It’s less if you reinvest the dividends.

Foolish takeaway

Chasing only the dividend yield is not a prudent investor approach, but capitalizing on the high yield of good, sustainable companies is a smart move. If you couple the growth potential of the company with good dividend yield, your composite sum of capital gains and dividend growth has the potential to make you a millionaire in fewer than 30 years.

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 Adam Othman 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 »