The stock market has been highly volatile so far this year. The COVID-19-led crash, stellar recovery from March lows, and the recent selloff could be unnerving for many investors. Further, with uncertain economic outlook and increasing infections, markets could remain volatile for the rest of the year.
Amid volatility, stocks with high dividend yields look attractive and could fetch you steady income. Here are three stocks that are offerings monster yields and have business models to ride out the COVID-19-led disruptions.
The energy infrastructure company has been taking a hit for lower mainline system’s throughput amid weak demand and pricing for oil. However, Enbridge (TSX:ENB)(NYSE:ENB), with its highly diversified revenue stream and contractual arrangements remains well positioned to continue to boost shareholders’ returns through consistent dividend payments.
Enbridge has been paying dividends since going public in 1953 and currently offers a monster yield of 7.8%. Over the last 25 years, Enbridge’s dividends have grown at a compound annual growth of 11%. Meanwhile, it paid about $6 billion in dividends in 2019, which implies a year over year increase of stellar 28%.
Enbridge’s highly contracted business, continued momentum in its other businesses, and cost-cutting measures are likely to support its cash flows, in turn, its future payouts. Also, investors could expect to benefit from capital appreciation as the market normalizes and economic activities gain pace.
Shares of NorthWest Healthcare Properties REIT (TSX:NWH.UN) are another reliable bet for steady income. NorthWest’s resilient portfolio (dominated by healthcare and hospitals), high portfolio occupancy rate, recent acquisitions, and weighted average lease expiry of 14.5 years provide a strong underpinning for growth and indicate that its payouts are safe.
In the most recent quarter, NorthWest reported an occupancy rate of 97.3%, thanks to its focus on the cure segment of the healthcare real estate. Meanwhile, it announced that about 80% of its tenants are government-funded and about 75% of its rents are inflation-indexed, which is encouraging. The company is also focusing on deleveraging its balance sheet through the strategic asset sale, which is likely to bolster its growth further.
Investors should note that with a yield of about 7% and monthly payouts, NorthWest should be on your radar to generate solid passive income.
With a monthly payout of $0.08 and a high dividend yield of 5.9%, TransAlta Renewables (TSX:RNW) is another top dividend-paying stock investors should bet on amid volatility. TransAlta’s diversified asset base and long-term contractual arrangements help the company to generate predictable cash flows and support its payouts.
TransAlta’s dividends have grown at a compound annual growth rate (CAGR) of about 4% since 2013. Meanwhile, its resilient business indicates that the payouts are safe and could increase in the future. Diversified revenues sources, cost-savings and pass-through provisions are likely to support its cash available for distribution.
While it is uncertain which way the stock market would go for the rest of 2020, these TSX stocks offer steady income opportunity amid volatility. Investors should note that the high-yields of these companies are safe, thanks to their resilient and diversified business model.
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 Sneha Nahata has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Enbridge. The Motley Fool recommends NORTHWEST HEALTHCARE PPTYS REIT UNITS.