3 Top Under-$50 Dividend Stocks to Buy Now

The economic rebound and revival in demand are likely to support corporate earnings growth and drive dividend payments.

The economic rebound and revival in demand are likely to support corporate earnings growth and drive dividend payments. As I expect corporate earnings to recover, here are the top three Canadian stocks that I believe could continue to boost their shareholders’ returns through higher dividend payments. Furthermore, shares of these TSX-listed companies are trading under $50.

Algonquin Power & Utilities

Investors seeking a growing dividend income stream could consider buying Algonquin Power & Utilities (TSX:AQN)(NYSE:AQN). The utility company has raised its dividends by about 10% annually over the past 11 years, thanks to its high-quality earnings base backed by regulated and contracted assets. 

Algonquin Power & Utilities projects its rate base to increase by about 11% annually over the next five years, which is likely to expand its high-quality earnings base and drive future dividends. Thanks to the growing rate base, Algonquin Power & Utilities expects its adjusted EBITDA to increase by about 15% annually through 2025. Furthermore, its earnings are likely to increase by 8-10% during the same period. 

I believe the company’s conservative business mix, rate base growth, strong balance sheet, and healthy earnings outlook position it well to deliver higher dividends in the coming years. At the current price levels, Algonquin Power & Utilities offers a dividend yield of 3.9%.

Enbridge 

Like Algonquin Power & Utilities, Enbridge (TSX:ENB)(NYSE:ENB) is another top stock to generate a growing dividend income. The energy infrastructure company has more than 40 diverse cash flow streams that reduce risk and drive higher dividend payments. Further, contractual arrangements and expense management support its distributable cash flows (DCF) per share. 

Enbridge’s dividend has grown by 10% annually in the last 26 years. Further, it has paid dividends for about 66 years. I believe the momentum in its core business and recovery in mainline volumes is likely to boost its future cash flows and, in turn, its dividends.

Enbridge projects 5-7% growth in its DCF per share in the coming years, implying that its dividends could grow at a similar pace in the coming years. Moreover, improving demand, strength in the base business, and multi-billion-dollar secured capital program is likely to fuel dividend growth over the next decade. Enbridge offers a juicy dividend yield of 7.2%. 

Pembina Pipeline  

Pembina Pipeline (TSX:PPL)(NYSE:PBA) is known for its robust dividend payments, thanks to its highly contracted business that generates robust fee-based cash flows. It has maintained and increased its dividends since 1998. Besides, it is offering a high yield of 7.1%, which is safe.   

I believe the recovery in energy demand, higher volumes, and increased pricing are likely to support Pembina’s earnings and fee-based cash flows. Moreover, its exposure to diversified commodities and contractual arrangements reduces price and volume risk and drives its dividend payouts.

While Pembina offers a high yield, its stock is trading at a forward EV/EBITDA multiple of 10.2, which is well below its peer group average. Further, it is also lower than its three-year historical average trading multiple. Pembina Pipeline’s low-risk business, strong fee-based cash flows, low valuation, and robust dividend payments make it a solid investment option.

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 PEMBINA PIPELINE CORPORATION.

More on Dividend Stocks

money goes up and down in balance
Dividend Stocks

This 6% Dividend Stock Is My Top Pick for Immediate Income

This Canadian stock has resilient business model, solid dividend payment and growth history, and a well-protected yield of over 6%.

Read more »

ways to boost income
Dividend Stocks

1 Excellent TSX Dividend Stock, Down 25%, to Buy and Hold for the Long Term

Down 25% from all-time highs, Tourmaline Oil is a TSX dividend stock that offers you a tasty yield of 5%…

Read more »

Start line on the highway
Dividend Stocks

1 Incredibly Cheap Canadian Dividend-Growth Stock to Buy Now and Hold for Decades

CN Rail (TSX:CNR) stock is incredibly cheap, but should investors join insiders by buying the dip?

Read more »

bulb idea thinking
Dividend Stocks

Down 13%, This Magnificent Dividend Stock Is a Screaming Buy

Sometimes, a moderately discounted, safe dividend stock is better than heavily discounted stock, offering an unsustainably high yield.

Read more »

Canadian Dollars bills
Dividend Stocks

Invest $15,000 in This Dividend Stock, Create $5,710.08 in Passive Income

This dividend stock is the perfect option if you're an investor looking for growth, as well as passive income through…

Read more »

A Canada Pension Plan Statement of Contributions with a 100 dollar banknote and dollar coins.
Dividend Stocks

3 Compelling Reasons to Delay Taking CPP Benefits Until Age 70

You don't need to take CPP early if you are receiving large dividend payments from Fortis Inc (TSX:FTS) stock.

Read more »

A worker overlooks an oil refinery plant.
Dividend Stocks

Better Dividend Stock: TC Energy vs. Enbridge

TC Energy and Enbridge have enjoyed big rallies in 2024. Is one stock still cheap?

Read more »

Concept of multiple streams of income
Dividend Stocks

Got $10,000? Buy This Dividend Stock for $4,992.40 in Total Passive Income

Want almost $5,000 in annual passive income? Then you need a company bound for even more growth, with a dividend…

Read more »