As the volatility remains elevated in the market, it makes sense to invest in high-quality dividend stocks that could continue to generate a steady inflow of income. Besides, top dividend stocks are also good long-term bets, thanks to their ability to generate robust and resilient cash flows.
Let’s focus on five such dividend stocks that could continue to enhance shareholders’ returns through consistent dividend payments. Meanwhile, these stocks are trading under $50 a share.
Algonquin Power & Utilities
Utility giant Algonquin Power & Utilities (TSX:AQN)(NYSE:AQN) has always impressed with its stellar cash flows and robust dividend payments. Its continued rate base growth and high-quality assets generate solid earnings and cash flows that support higher dividend payments.
Notably, the company announced a 10% hike in annual dividends for 2021. Meanwhile, it has raised it by about 10% annually in the last 10 years. Looking ahead, the company projects double-digit growth in its rate base, implying that its earnings could continue to grow at a decent pace and support higher dividend payments. At current price levels, it offers a decent dividend yield of 3.8%.
Enbridge (TSX:ENB)(NYSE:ENB) is a top income stock and is a must-have in your portfolio. The company’s diversified cash flow streams, long-term contracts, and strength in the base business continue to drive its distributable cash flows (DCF) and, in turn, its dividends.
Enbridge has uninterruptedly paid dividends for about 66 years and increased it by a CAGR of 10% since 1995. I believe the recovery in its mainline volumes, improving energy outlook, diversified cash flows, and secured capital program augurs well for future growth and is likely to drive its dividends. Enbridge projects a 5-7% growth in its DCF per share in the coming years, indicating that its dividends could reflect a similar growth rate in the future. Enbridge stock is yielding over 7.2%.
Like Enbridge, Pembina Pipeline (TSX:PPL)(NYSE:PBA) offers a solid combination of income and growth. I believe economic reopening, improving volumes, and higher prices are likely to support the uptrend in Pembina Pipeline stock. Meanwhile, its highly contracted business and ability to generate strong fee-based cash flows are likely to drive future dividends.
Pembina has maintained and grown its dividends since 1998. Meanwhile, its dividends have grown at a CAGR of 4.9% in the last 10 years. Pembina offers a dividend yield of 6.9% at the current price levels.
AltaGas‘s (TSX:ALA) unique mix of low-risk and high-growth utility and midstream assets positions it well to consistently boost shareholders’ returns through dividend payments.
The continued growth in AltaGas’s rate base and higher export volumes at its midstream operations are likely to drive its earnings and dividends. Meanwhile, cost reductions and customer growth are likely to support its financials. AltaGas recently announced a 4% growth in its dividends and offers a dividend yield of 4.7%.
Telus (TSX:T)(NYSE:TU) is known for its strong dividend payment history. Despite the challenges from the pandemic, the telecom company didn’t suspend or reduce its dividends, which indicates the strength of its cash flows.
The company targets 7-10% annual growth in its dividends under its multi-year dividend-growth program. I believe with its growing subscriber base, 5G rollout, strong average revenue per user, and expense management, Telus could continue to offer higher dividends in the future. Currently, Telus provides an annual yield of 4.8%.
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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 Sneha Nahata has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Enbridge. The Motley Fool recommends ALTAGAS LTD., PEMBINA PIPELINE CORPORATION, and TELUS CORPORATION.