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5%-Yield Top Dividend Stocks to Buy in 2020 and Hold Forever

Because the TSX index trades at an all-time high, investors cannot be too careful about their investment holdings. Here are two defensive dividend stocks to buy in 2020 and hold forever. Not only do they offer juicy dividend yields, but they also have stable growth profiles to allow you to feel at ease during market corrections.

Pembina Pipeline

Pembina Pipeline (TSX:PPL)(NYSE:PBA) stock has consolidated sideways for the large part in 2019. The quality energy infrastructure business closed the acquisition of Kinder Morgan Canada as well as the U.S. portion of the Cochin Pipeline on December 16.

As previously promised, Pembina increased its monthly dividend by 5% to $0.21 per share for the dividend that will be declared for January and payable in February.

Pembina has a proven track record of being shareholder friendly. It has delivered market-beating returns with an above-average dividend yield for years.

For example, since 2007 and 2011, respectively, it has delivered annualized total returns of 12.3% and 13.1%. Both starting points were when the stock was fairly priced such that there was no bias from a low valuation.

At writing, the stock trades at roughly a 20% discount from those valuations and offers a secure forward yield of 5.2%. Investors buying today can collect a consistent monthly dividend and expect market outperformance to continue.

A $10,000 investment generates about $522 of annual income for 2020.


Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) is easily the most attractively valued big Canadian bank available to investors. This means more income through a fat yield and greater total returns prospects.

Over the last six years, Scotiabank has re-positioned itself for long-term growth by exiting 21 countries and 11 non-core businesses. Interestingly, despite all the divestitures and acquisitions, the international bank still managed to grow earnings per share by 5.6% per year over the period.

Other than Canada and the United States, Scotiabank’s key areas of exposure are Chile, Colombia, Mexico, and Peru. These Pacific Alliance countries are underbanked and offer greater organic growth than in the developed North American markets.

Meanwhile, investors don’t entirely trust the bank yet, as BNS stock is undervalued by about 11% and offers one of the best yields in the banking industry. At writing, Scotiabank stock is good for a yield of 4.8%.

Investors buying today can collect a secure dividend and expect the bank to carry on hiking its dividend over time. Scotiabank’s upcoming dividend hike that will be declared on February 25 should bring its yield close to 5% based on today’s stock price.

Investor takeaway

Buy good-valued Pembina and Scotiabank stocks for safe yields of 5%, hold forever, and enjoy perpetual dividend growth!

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Fool contributor Kay Ng owns shares of Pembina Pipeline and The Bank of Nova Scotia. The Motley Fool recommends BANK OF NOVA SCOTIA and PEMBINA PIPELINE CORPORATION.

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