Amid a low-interest-rate environment, the returns on debt instruments have become unattractive. Meanwhile, here are four dividend stocks you can buy to earn a stable income. Investors can also benefit from stock price appreciation.
Enbridge
Enbridge (TSX:ENB)(NYSE:ENB) is a Dividend Aristocrat, which has raised its dividends for the past 26 years at a CAGR of 10%. In December, the company’s board had increased its quarterly dividends by 3% to $0.835, with its forward dividend yield currently standing at 7.55%.
The company operates highly contracted and diversified businesses, which deliver stability to its earnings and cash flows. Further, the company is continuing with a $16 billion diversified secured capital programs supported by take-or-pay and cost-of-service agreements. These projects could contribute $2 billion to its EBITDA from 2023. The company’s financial position also looks healthy, with its liquidity standing at $13 billion as of December 31. So, given its high-growth prospects, stable cash flows, and healthy liquidity position, I believe Enbridge would be a good buy for income-seeking investors.
Pembina Pipeline
Supported by its highly contracted businesses, Pembina Pipeline (TSX:PPL)(NYSE:PBA) has raised or maintained its dividends for the previous 22 years. In 2020, the company earned around 94% of its adjusted EBITDA from fee-based or take-or-pay agreements, which provided stability to its financials. Meanwhile, the company has planned to make $785 million of capital investments in 2021. These investments, along with a recovery in oil demand, could drive its financials this year.
Meanwhile, Pembina Pipeline’s management expects its 2021 adjusted EBITDA to be in the range of $3.2-$3.4 billion. Further, it had liquidity of $3.2 billion at the close of the fourth quarter. So, I believe the company’s dividends are safe. The company currently pays monthly dividends of $0.21 per share, representing a forward dividend yield of 7.7%.
BCE
One of the three largest telecommunication operators in Canada, BCE (TSX:BCE)(NYSE:BCE) has a long history of paying dividends. It has been raising its dividends by over 5% every year for the last 12 years. Last month, it increased its quarterly dividends by 5.1% to $0.875 per share, representing a forward dividend yield of 6.3%.
Despite the pandemic, BCE added 147,000 new customers in the recently announced fourth quarter. As of December 31, the company had six million direct fibre and rural wireless home internet connections. Meanwhile, the company’s management expects to add 900,000 more direct fibre and rural wireless home internet customers this year while doubling its 5G population coverage. To achieve this target, the management has planned to invest $1-$1.2 billion over the next two years. So, the company’s growth prospects look healthy.
Keyera
Supported by its strong fundamentals, Keyera (TSX:KEY) has raised its dividends at a CAGR of 7% since 2008. During the period, the company’s DCF per share has grown at a CAGR of 9%. Currently, the company pays monthly dividends of $0.16 per share, representing a forward dividend yield of 7.75%. Its payout ratio was at 59%. With the company targeting a payout ratio of 50%-70%, the company still has room to raise its dividends.
Keyera earns 70% of its cash flows from fee-for-service contracts, which provides stability to its financials. The company is planning to make a capital expenditure of $400-$450 million in 2021. The company has also taken initiatives to lower its SG&A expenses and optimize its operation, which could expand its margins in the coming quarters. So, the recovery in oil demand, capital investments, and falling expenses could drive Keyera’s earnings in 2021.
