The Canadian government and the Canada Revenue Agency (CRA) is helping millions of people who have been directly affected by the COVID-19. The CRA is distributing $2,000 per month over four weeks to eligible Canadians to show the government’s financial support.
If the pandemic does not end soon and the lockdown continues, you can apply for the Canada Emergency Response Benefit (CERB) payments for up to a total of 16 weeks. As the lockdown continues, millions of Canadians continue to lose jobs.
If you are fortunate enough to have saved substantial money that you can afford to ride out the wave, you can use the CERB payments you receive to invest in quality dividend stocks to supplement your $2,000 per month income.
I will discuss three stocks that you can invest in to take advantage of CERB payments and supplement them through dividend income.
Compared to most other companies, Fortis Inc. (TSX:FTS)(NYSE:FTS) is a utility company that enjoys relatively stable revenue. Utilities are highly regulated essential businesses that continue to operate regardless of the economic circumstances or the global health situation. No matter how bad the spread of the pandemic, people can’t cut their light and heat.
These are fundamental requirements. People will continue to pay their bills, even if they have to sell their cars. Fortis managed to remain profitable during the financial crisis 12 years ago, and it has increased its dividends consecutively for the past 46 years.
It is a Canadian Dividend Aristocrat that could serve as a vital addition to your investment portfolio with its 3.59% dividend yield.
High-yield dividend stock
Enbridge Inc. (TSX:ENB)(NYSE:ENB) is a stock you can add to your portfolio for its high dividend yield. The energy sector company is not enjoying the best few months right now. Its Q1 2020 earnings report was disappointing for the company, but was not a disastrous period. The headline-grabbing figure was a $1.4 billion GAAP loss.
While the loss is substantial, it was due to non-cash charges. A $1.7 billion impairment charge and $1.9 billion worth of unrealized derivative losses contributed to the losses.
If you remove the non-cash costs, Enbridge has a positive adjusted EBITDA. Enbridge increased its dividend payouts to $0.81, equating to a 7.24% dividend yield, around the time it released its Q1 earnings.
While Enbridge entails a slight risk, it offers a very juicy dividend yield that can make it a valuable stock for a dividend income portfolio.
High risk and reward
If you have higher risk tolerance than most investors, consider adding the Chemtrade Logistics Income Fund (TSX:CHE.UN) stock to your investment portfolio. Chemtrade is an industrial company that provides industrial chemicals to companies across various sectors. The stock is structured like an income fund. It means that its shareholders get monthly dividends.
Chemtrade has been paying investors their dividends since 2001. It has a strong dividend-paying streak that it did not break even during the crisis of 2008. However, the stock slashed its dividends by 50% in anticipation of the market crash due to COVID-19.
While many shareholders were disappointed, the company took it as a preemptive measure to avoid having to slash dividends later out of desperation.
At writing, the stock is trading for $5.51 per share, with a juicy 10.89% dividend yield. Such a high dividend yield can cause investors to worry due to concerns about sustainability. However, Chemtrade caters to several industries that will continue to operate during the pandemic. It means that Chemtrade can continue generating revenue to support its dividend yield.
Whether you use a portion of your savings in cash or CERB payments that you can afford to set aside, you can create a portfolio of stocks that can help you earn substantial passive income to supplement your $2,000 CERB payments by the CRA.
Chemtrade, Fortis, and Enbridge can help you begin creating a diversified portfolio of dividend-paying stocks.
Speaking of substantial income …
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Fool contributor Adam Othman has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Enbridge.