Investors generally turn cautious when they notice super-high dividend yields. While that could be valid for some set of stocks, many times, they are indeed great opportunities. High yield means higher passive income. I will cover such high-yield TSX stocks that offer safety and solid long-term total return potential.
Top-yielding TSX stocks: Brookfield Property Partners
The real estate giant Brookfield Property Partners (TSX:BPY.UN)(NASDAQ:BPY) is one of the top-yielding stocks in Canada. It is currently trading at a yield of 14%, notably higher than TSX stocks at large. If one invests $10,000 in BPY, they will generate $350 in dividends quarterly.
With more than $200 billion in real estate assets under management, Brookfield Property Partners operates 134 office properties and 122 malls.
In the last couple of months, Brookfield Property stock has nearly halved due to the pandemic. That’s because lockdowns are expected to significantly hamper the retail real estate business. Also, rent deferments from tenants will likely dent Brookfield’s cash flows.
However, Brookfield looks well placed to pay its shareholders in these challenging times. Even if its earnings come under pressure this year, the real estate titan can maintain its dividend with its strong balance sheet or by issuing new debt.
Investors should be cautious, though. A probable dividend cut can’t be totally ruled out if the pandemic and lockdowns last longer than expected.
Interestingly, major economies re-opening after lockdown is a positive sign for Brookfield Property Partners and its investors. While the start could be very slow initially, it will bring in much-needed cash from operations.
RioCan REIT (TSX:REI.UN) is one of the biggest REITs in the country. The stock offers a dividend yield of 10% at the moment. Like peer REITs, RioCan stock has also halved amid the pandemic this year.
A major portion of its business comes from Toronto, and thus it has seen a notable surge in rent deferrals recently. However, the real estate company conveyed last week that its dividends are safe.
Also, along with offices and apartments, grocery stores are some of the major tenants of RioCan. It generates almost three-fourths of revenues from grocers, which might act as necessary padding.
As stated earlier, the re-opening of economies could start the engine again for these real estate companies. This might revive the RioCan stock in the short to medium term. A juicy yield of 10% and cheaply valued stock make it an attractive proposition for long-term investors.
At $5 billion of market capitalization, Keyera is one of the biggest midstream energy companies in Canada. It yields 9% at the moment, much higher than peer TSX stocks.
While the energy sector was under severe turmoil lately, pipeline companies like Keyera were relatively better. That’s because they have limited exposure to volatile crude oil prices. This makes Keyera’s high yield safe compared to oil-producing companies.
Apart from handsome yield, Keyera’s dividend growth also stood tall compared to peers. It managed to grow dividends by 8% compounded annually in the last five years.
Keyera stock was notably weak during the COVID-19 crash in March. However, it has exhibited a steady recovery since then. Interestingly, the stock looks attractive from the valuation perspective and indicates more room for growth going forward.
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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 Vineet Kulkarni has no position in any of the stocks mentioned. The Motley Fool recommends Brookfield Property Partners LP.