When it comes to buying TSX stocks in a recessionary environment, some of the first companies that investors should consider are stable dividend payers.
The most important thing to look for is a stable business model. When you find businesses with highly stable and defensive business models, there’s a good chance those companies will pay significant dividends.
Dividend stocks can be some of the most highly sought-after stocks on the TSX when the economy is in recession. This is because investors can count on the reliable dividend yields to generate cash for their portfolio.
And when you’re receiving cash in a recession, there are a lot of high-quality opportunities to use it.
The only thing better than a reliable dividend stock is one that pays out dividends monthly. Here are two of the best TSX dividend stocks to buy today.
TSX real estate stock
One TSX real estate stock that has exceptional value is NorthWest Healthcare Properties REIT (TSX:NWH.UN).
NorthWest owns medical office buildings and hospitals in numerous countries around the world. Although it operates in the healthcare industry, NorthWest has seen an impact on its business and tenants.
With elective surgeries and other procedures being canceled, several tenants have been temporarily put out of work.
While this is a concern, the risk is only slight. One of the most attractive features of NorthWest is that 85% of the rent it collects is underpinned by government funding.
So, although it’s been working with some of its tenants on a case-by-case basis, the majority of rents are being collected by the trust.
Furthermore, the longer these surgeries and procedures are postponed, the more demand is being built up for when things re-open.
This puts NorthWest in a great position. It has a strong enough portfolio to weather the current environment. Plus, when things start to open back up, it’s one of the few industries that should recover rapidly.
At current prices, the high-quality stock’s dividend is yielding roughly 8%, one of the most significant on the TSX. Plus, that dividend gets paid to investors monthly.
Green energy TSX stock
The other top TSX stock to buy today that’s paying a monthly dividend is Northland Power (TSX:NPI).
Northland is a green energy company with exciting long-term growth potential. Green energy is already one of the top long-term growth industries, and Northland may be the best of the bunch.
It has high-quality offshore and onshore wind assets as well as several hydro assets making up the bulk of its renewable-generating capacity. In total, it has over 2,000 megawatts of generating capacity.
However, that’s not what makes Northland so attractive. The company also has another 1,000 megawatts in development. This would add roughly 50% to its capacity, providing significant potential for long-term growth.
The company also receives about 10% of its revenue from regulated utility assets, further insulating an already highly defensive business.
As of Friday’s close, the top green energy TSX stock had a roughly 4% dividend yield. This is significant, as it returns a fair amount of cash to investors monthly, while they realize the major appreciation in the shares.
Both these companies are defensive while offering a significant opportunity to long-term investors. NorthWest is one of the most attractive REITs on the TSX and offers a massive dividend yield.
Northland is a great long-term TSX stock to own for capital appreciation.
In addition to these two stocks, check out some of the other top buys today.
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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 Daniel Da Costa owns shares of NORTHLAND POWER INC. and NORTHWEST HEALTHCARE PPTYS REIT UNITS. The Motley Fool recommends NORTHWEST HEALTHCARE PPTYS REIT UNITS.