When it comes to dividend investing, investors focus on the absolute payout amounts. They should instead consider dividend yields, because they tell you the shareholder return per dollar invested. Here are three TSX stocks with highly juicy and stable yields.
Energy stocks never fully recovered from the pandemic crash last year. Top midstream stock Enbridge (TSX:ENB)(NYSE:ENB) is still trading 22% lower than last year’s high. So, this would be a great opportunity for investors to lock in a handsome yield for the long term.
Enbridge stock is currently trading at a dividend yield of 8%, notably higher than TSX stocks at large. It has increased dividends for the last 26 straight years.
It earns stable revenues, which facilitates stable payouts for shareholders. ENB is a pipeline company and does not have a large exposure to volatile energy commodity prices. Interestingly, Enbridge will likely continue to pay stable dividends in the future, driven by its long-term, fixed-fee contracts and diversified revenue base.
ENB stock might lag broader markets intermittently, but its total returns have notably outperformed in the long term.
Next up among the yield titans is IGM Financial (TSX:IGM). IGM Financial is an $8.5 billion wealth management company with $239 billion of assets under management and consideration. It is a part of the Power Corporation of Canada.
IGM Financial offers a yield of 6.5%, almost double the average TSX stocks. Though yield looks pretty juicy and it has a long payment history, the company has not increased dividends since 2014. Thus, dividend-growth investors looking to beat inflation might overlook IGM Financial stock.
On the financials front, IGM Financial has seen flattish growth in the last few years. Its strong balance sheet and lower leverage make it financially sound, which makes dividend cuts unlikely.
The real estate sector took a deep hit amid the pandemic last year. But as economies recover and we return to normalcy, it makes sense to bet to it. REIT is one of the convenient ways to do it. It offers portfolio diversification and a stable passive income as well. Consider SmartCentres REIT (TSX:SRU.UN) for its looming recovery and a nice dividend yield.
It pays a stable dividend yield of 7% at the moment. Many REITs trimmed dividends last year to save on cash as rentals were deferred. However, SmartCentres maintained shareholder payouts as most of the tenant stores were essential service providers.,
SmartCentres might see a higher occupancy rate and a surge in rental yields, as mobility restrictions gradually ease.
SRU stock has soared almost 45% since its pandemic lows last year. Based on its impending recovery and a stable dividend profile, SmartCentres REIT offers an attractive investment proposition.
If you invest $10,000 equally in these three high-yield stocks, you will make more than $700 per year in dividends. Interestingly, the dividends and the portfolio will continue to grow in value over the years as companies increase their profits.
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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 Vineet Kulkarni has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Enbridge. The Motley Fool recommends Smart REIT.