The TSX is home to many blue-chip stocks with reliable yields. For investors seeking dividend income, that’s great news.
However, it’s important for investors to not get caught chasing yields. This often results in holding stocks with subpar performance.
Instead, investors must focus on stocks with dividends that are sustainable. After all, a juicy yield isn’t worth much if it’s primed for a hefty cut anyway.
So, it’s vital that investors can identify the stocks to meet their goals. For generating dividend income, there are many blue-chip TSX stocks that fit the bill.
Today, we’ll look at two such names that can help set up a solid passive income stream.
When it comes to dividend stability, it’s hard to beat BNS, as it’s paid a dividend every year since 1832, and grown its dividend for most of that time too.
Even through a rough 2020, BNS remained committed to providing its investors with value. Now, as economies around the globe continue to inch towards strong recoveries, BNS’ global portfolio of positions could flourish.
This all means that investors seeking dividend income should be intrigued by BNS as an option. As of this writing, it’s trading at $79.45 and yielding 4.53%.
As far as bank stocks go, that’s a pretty solid yield – not to mention that BNS has various avenues for growth and stability moving forward.
With an investment of $50,000, an investor could generate $2265 in a single year in dividend income with BNS. That’s a solid way to boost a passive income stream with a major Canadian bank.
While many blue-chip stocks offer similar or high yields, very few offer the same stability as BNS. As mentioned, yield chasing often ends up being sub-optimal, as excessively large yields are typically a red flag.
If you’re looking to boost your dividend income, be sure to take a look at BNS.
FTS is typically thought of as a more defensive stock, and that’s certainly true. It tends to ignore the pressures of the market and beat to its own drum.
This is due to the fact its revenue streams are so concrete, reliable, and safe. FTS conducts much of its business through thoroughly regulated contracts, so the company’s revenue expectations are usually very stable.
This also translates to a rock-solid dividend offered to investors, backed by a steady flow of revenue. As of this writing, FTS is trading at $54.63 and yielding 3.7%.
The company has a solid track record for maintaining and growing its dividend, and could be a solid choice for dividend income portfolios.
Of course, investors give up a bit in way of the yield for that extra defensive cushioning. While t is might not be ideal for all types of investors, but investors with a slightly short horizon or less risk tolerance may prefer a stock like FTS.
Dividend income strategy
Both BNS and FTS can offer investors a solid path to sustainable dividend income. If you’re looking to add some passive income components to your investment mix, these two names are worth further consideration.
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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 Jared Seguin has no position in any of the stocks mentioned. The Motley Fool recommends BANK OF NOVA SCOTIA and FORTIS INC.