Retirees: 3 Safe Dividend Stocks Yielding +5%

Safe dividend stocks like Telus (TSX:T)(NYSE:TU), Rogers Sugar (TSX:RSI), and Crombie REIT (TSX:CRR.UN) offer a nice combination of nice yields and steady payouts.

| More on:
A close up image of Canadian $20 Dollar bills

Image source: Getty Images

As many Canadian stocks race to cut or suspend their dividends, many older investors have started rethinking their whole investment process. Yield is great, but they’re more interested in finding safe dividend stocks.

That’s easier said than done, of course. The economy is essentially shut down, and this artificially created downturn may linger for a year or two before substantially getting better. In this type of environment, it’s easy to argue there’s really no such thing as safe dividend stocks. Every company may end up becoming risky.

But there are some stocks that will still be much safer than others. Their dividends are affordable, even if the economy continues to struggle.

Let’s take a closer look at some of these companies — safe dividend stocks that offer a yield of at least 5%.

Telus

Telus (TSX:T)(NYSE:TU) hasn’t fallen nearly as much as the overall market. After all, a world where we’re all trapped at home and forced to call our loved ones is good for the provider of wireless phone, cable TV, and internet service.

But shares have fallen enough to make this safe dividend stock’s valuation pretty compelling. Shares trade at approximately 15 times trailing earnings. Previously, shares traded closer to 20 times trailing earnings. And with shares down close to 20% compared to their peak just a couple of months ago, the dividend yield has been boosted significantly. The stock offered a nice yield before; now the payout is a robust 5.1%.

And remember, Telus is one of Canada’s best dividend-growth stocks. It has upped its payout each year since 2010, often treating investors to two dividend hikes per year. Management may make the prudent decision to pause dividend hikes for the time being, but it’ll only be a matter of time until this steady performer reverts back to its previous ways.

Rogers Sugar

Rogers Sugar (TSX:RSI) — which is one half of the sugar duopoly that dominates the Canadian market — is a boring bond-like investment that I think has been unfairly punished through this market downturn. Shares are down a little more than 10% compared to their short-term peak in mid-February.

If anything, I think the stock should be up. There’s been a massive run on baking supplies, as bakers load up on flour, yeast, and sugar. They want to ensure they have adequate supplies just in case COVID-19 really impacts the supply chain. This demand has been so high that it has led to sugar shortages at Canadian grocery stores, although Rogers has done a good job minimizing them.

Even before this hoarding began, Rogers was among Canada’s best safe dividend stocks. It has paid a $0.09-per-share quarterly dividend for years now, easily maintaining the payout, even as its newest division, maple syrup, struggled a bit. The current yield is 7.7%, and it should be well covered by earnings in 2020.

Crombie REIT

Many investors are avoiding REITs right now, convinced these companies are about to face an avalanche of tenants who can’t pay their rent. But reality is nowhere close to that bad.

Take Crombie REIT (TSX:CRR.UN), the owner of 285 different properties spanning some 18 million square feet of gross leasable space. Its largest tenants are Sobeys and Safeway supermarkets, with these safe sources making up approximately 55% of all rents. Other top tenants include drugstores and various levels of government.

Crombie is also in the early innings of an interesting development program. The company owns retail real estate across the country that can be redeveloped into mixed-use facilities, with most plans calling for a grocery store on the bottom and apartments on top. Crombie has identified more than 30 sites with potential to add some 11 million square feet to the portfolio.

Although shares have recovered nicely from their lows, Crombie is still a cheap stock. It trades at approximately 12 times trailing adjusted funds from operations, despite several developments expected to start adding to the bottom line in 2020. The dividend yield is a robust 6.8%.

The bottom line on these safe dividend stocks

It’s easy to see why some investors are flocking to quality. Safe dividend stocks like Telus, Rogers Sugar, and Crombie REIT offer a unique combination of high yields and safe payouts. That’s an excellent combination no matter what the underlying market does.

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 Nelson Smith owns shares of TELUS CORPORATION.

More on Dividend Stocks

edit Safety First illustration
Dividend Stocks

How to Generate Inflation-Proof Passive Income

Inflation-resistant, passive-income stocks like Enbridge (TSX:ENB)(NYSE:ENB) should be on your list.

Read more »

Increasing yield
Dividend Stocks

Dividend Chasers: 3 Stocks With Yields of 8% or More

Three TSX stocks are appetizing for investors whose strategy is to chase after dividend beasts.

Read more »

Simple life style relaxation with Asian working business woman healthy lifestyle take it easy resting in comfort hotel or home living room having free time with peace of mind and self health balance
Dividend Stocks

Become a Laidback Landlord Easily With Canadian REITs

Do you want to continue earning rental income but reduce your workload? You should dig deeper into REIT investing!

Read more »

data analyze research
Dividend Stocks

Stocks for Beginners: 3 Reliable Dividend Stocks to Buy Now

The best time to start investing is in a market correction. If you are a new investor, here are three…

Read more »

funds, money, nest egg
Dividend Stocks

Canadian Retirees: 2 Top TFSA Stocks for Tax-Free and Passive Retirement Income

Invest in these two top stocks to enjoy high-yielding, tax-free dividend income in your TFSA amid the market pullback.

Read more »

financial freedom sign
Dividend Stocks

Generate Enough Passive Income to Retire

Looking to generate a stream of passive income to retire on? Here are several stocks to start building out your…

Read more »

Various Canadian dollars in gray pants pocket
Dividend Stocks

3 Stocks to Hold for a Reliable Source of Passive Income

Are you looking for a way to produce a reliable source of passive income? Hold these three stocks!

Read more »

worry concern
Dividend Stocks

3 Stocks to Buy if You Are Worried About a Recession

There are a lot of safe investments that can help your portfolio remain afloat during a recession and the market…

Read more »