3 Top Canadian Dividend Stocks With Yields Above 5%

Amid the low-interest environment, these high-yielding dividend stocks can deliver stable passive income.

| More on:
Increasing yield

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

Amid the low-interest environment, investors can earn stable passive income by investing in high-yielding dividend stocks. Meanwhile, these stocks are also less volatile than non-dividend-paying companies due to their regular payouts, thus providing stability to your portfolio. So, here are three Canadian stocks that pay dividends with above 5% yields.

BCE

Amid increased digitization and remote working and learning, the demand for telecommunication services is rising. So, I have selected BCE (TSX:BCE)(NYSE:BCE), one of the three top telecommunication service providers in Canada, as my first pick. To capture the expanding addressable market, the company has planned to invest at least $1 billion over the next two years to widen its broadband and wireless networks.

Meanwhile, the company’s management expects to add 900,000 new direct fibre and rural wireless home internet connections this year while doubling its 5G coverage. Along with these new connections, increased economic activities could drive the company’s top line and cash flows. Additionally, the company’s financial position also looks healthy, with its liquidity standing at $3.8 billion at the close of last year. So, I believe the company’s dividends are safe. Currently, the company pays quarterly dividends, with its yield standing at 5.75%.

TC Energy

Despite the scrapping of the permit for its Keystone XL pipeline, TC Energy (TSX:TRP)(NYSE:TRP) has returned over 16% this year, easily outperforming the broader equity markets. Amid improvement in economic activities, the oil demand has increased. Investors hope that higher oil demand could drive its asset utilization rate and financials, in turn boosting its stock price. Meanwhile, the company earns about 95% of its adjusted EBITDA from rate-regulated assets or long-term contracts, delivering stable cash flows.

These stable cash flows have allowed TC Energy to raise its dividends for 21 consecutive years. Currently, the company pays quarterly dividends of $0.87 per share, representing a dividend yield of 5.8%. Meanwhile, the company will be investing around $20.2 billion over the next four years, with $4.2 billion worth of projects put into service this year.

These investments could increase its rate base, thus boosting its earnings and cash flows. Supported by these investments, the management expects to increase its dividends at a 5-7% rate over the next few years. Given its stable cash flows, healthy growth prospects, and strong liquidity position, I believe TC Energy is an excellent buy for income-seeking investors.

Canadian Utilities

My third pick would be Canadian Utilities (TSX:CU), which is involved in the low-risk utility business serving around two million customers. It is also engaged in power production and storage services. Its regulated utility business generates stable cash flows, which have allowed the company to raise its dividends for 49 straight years.

Canadian Utilities currently pays quarterly dividends of $0.4398, with its forward dividend yield standing at 5.1%. Meanwhile, the company’s management is also looking at expanding its power-generating capabilities from renewable sources. Further, it has planned to invest around $3.2 billion over the next three years on regulated utility assets and secured growth energy infrastructure projects.

These investments could boost its earnings and cash flows, allowing Canadian Utilities to maintain its dividend growth. At the end of last year, the company had $778 million in cash. So, its financial position also looks healthy.

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 Rajiv Nanjapla has no position in any of the stocks mentioned.

More on Dividend Stocks

Dividend Stocks

Passive Income: 3 Top Canadian Stocks to Buy for Monthly Dividends

Companies such as Pembina Pipeline and Killam Apartment REIT pay investors monthly dividends, making them top bets for income-seeking investors.

Read more »

Dots over the earth connecting the world
Dividend Stocks

3 of the Top-Growing Stocks on Earth

Market volatility remains high in Q3 2022, but it’s easy to identify the top-growing stocks on Earth.

Read more »

Profit dial turned up to maximum
Dividend Stocks

1 Undervalued Canadian Dividend Stock to Buy for TFSA Passive Income and Total Returns

This cheap Canadian energy stock provides an attractive dividend yield for TFSA passive income and a shot at some big…

Read more »

money cash dividends
Dividend Stocks

Want Passive Income? 1 TSX Stock for $8/Day in Dividends

If you need cash right away, then this TSX stock can make you passive income from a stable dividend that…

Read more »

edit Balloon shaped as a heart
Dividend Stocks

My 3 Favourite TSX Dividend Stocks Right Now

Canadian dividend stocks make for great long-term buy-and-hold investments.

Read more »

value for money
Dividend Stocks

3 Incredibly Cheap Dividend Stocks to Buy for Dependable Passive Income

Now is an excellent time to load up on Canadian dividend stocks. Here are top picks that are all trading…

Read more »

A close up image of Canadian $20 Dollar bills
Dividend Stocks

3 Simple TSX Stocks to Buy With $25 Right Now

Canadians with capital of as low as $25 can purchase three simple stocks right now and earn recurring passive income…

Read more »

edit Person using calculator next to charts and graphs
Dividend Stocks

2 No-Brainer U.S. Stocks for Investors in August

Here are two undervalued U.S. stocks to diversify your investment portfolio. They both pay safe and growing dividends!

Read more »