The Motley Fool

The 3 Best Dividend Stocks for High Yield in 2021

Image source: Getty Images

Income investors are constantly searching for the best TSX dividend stocks that offer above-average yield.

Top Canadian dividend stocks in the TSX Index pay reliable dividends supported by strong cash flow. Industry leaders, stocks with wide moats, and companies that provide essential products or services tend to be good picks.

Why Enbridge is one of the best dividend stocks for high yield

Enbridge (TSX:ENB)(NYSE:ENB) provides a 7.5% yield. The energy infrastructure giant raised the payout last year, and investors should see steady dividend hikes of 5-7% annually over the medium term.

Enbridge is best known for its oil pipelines. This division took a hit in 2020 but a return to near-capacity volumes should occur in 2021. In the meantime, Enbridge’s natural gas utility businesses, gas transmission, storage, and renewable energy assets continue to perform well.

The stock looks cheap near $45 per share. The 12-month high is $57, and a run to $55 wouldn’t be a surprise by the end of 2021. Long-term investors have enjoyed fantastic returns with Enbridge stock.

5 Stocks Under $49 (FREE REPORT)

Click here to gain access!

IGM Financial is an attractive high-yield stock pick for the next 20 years

IGM Financial (TSX:IGM) offers a 6.4% dividend yield. The company owns IG Wealth Management, Mackenzie Investments, and Investment Planning Counsel. IGM Financial also owns a 46% stake in fintech disruptor Wealthsimple.

These businesses help clients with all aspects of their wealth management and financial planning. In the coming years, analysts anticipate a wealth transfer of tidal-wave proportions. Recipients of decades’ worth of property and stock appreciation will increasingly turn to professionals to help them manage this wealth.

IGM Financial is part of the Power Corp family of companies. A move by the parent to privatize IGM Financial could result in a nice premium on the stock price. An IPO of Wealthsimple might also occur and provide a special dividend opportunity.

Why Russel Metals is a top high-yield stock to buy now

Russel Metals (TSX:RUS) is one of the largest metals distribution players in North America with steel distribution, metals service centres, and an energy products division.

The new administration in the United States should lead to less erratic tariff disputes in the next few years. At the same time, large fiscal stimulus efforts in the U.S. and Canada should support strong demand for Russel Metals products. The energy sector is also on the cusp of a rebound.

Russel Metals is a reliable dividend stock. The board held the payout steady during the past two downturns, so investors should be confident the distribution is safe.

At the current share price near $23, the stock provides a 6.5% yield. Investors who’d bought the stock at the March 2020 low have already doubled their money, but more upside should be on the way.

Russel Metals grows through acquisitions. It recently completed another deal, and ongoing takeovers should continue as the industry consolidates. At some point, Russel Metals itself might become a target.

The bottom line on top dividend stocks for high yield

Enbridge, IGM Financial, and Russel Metals are three of the best high-yield dividend stocks to consider in 2021. The distributions should be very safe, and investors get a short at huge increases in the stock prices by the end of the year.

Great news! The market is giving investors a chance to buy these top stocks at cheap prices today.

Just Released! 5 Stocks Under $49 (FREE REPORT)

Motley Fool Canada's market-beating team has just released a brand-new FREE report revealing 5 "dirt cheap" stocks that you can buy today for under $49 a share.
Our team thinks these 5 stocks are critically undervalued, but more importantly, could potentially make Canadian investors who act quickly a fortune.
Don't miss out! Simply click the link below to grab your free copy and discover all 5 of these stocks now.

Claim your FREE 5-stock report now!

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.

The Motley Fool owns shares of and recommends Enbridge. Fool contributor Andrew Walker owns shares of Power Corp and Enbridge.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss an important event.

Iain Butler and the Stock Advisor Canada team only publish their new “buy alerts” twice a month, and only to an exclusively small group.

This is your chance to get in early on what could prove to be very special investment advice.

Enter your email address below to get started now, and join the other thousands of Canadians who have already signed up for their chance to get the market-beating advice from Stock Advisor Canada.