If you are looking to supplement your passive income with dividend stocks, consider buying the shares of Pembina Pipeline (TSX:PPL)(NYSE:PBA), AltaGas (TSX:ALA), and NorthWest Healthcare (TSX:NWH.UN).
These Canadian companies generate resilient cash flows and have a sustainable payout ratio, indicating that investors can rely on their dividends.
Pembina Pipeline pays a monthly dividend of $0.21 a share, reflecting a high yield of 6.8%. Notably, the company has been paying dividends for more than two decades and has paid nearly $9.5 billion in total dividends since then.
Pembina Pipeline owns diversified and highly contracted assets that generate strong fee-based cash flows and support its monthly dividend payouts. Notably, Pembina’s resilient cash flows have allowed it to increase its dividends by a compound annual growth rate (CAGR) of about 5% in the last 10 years.
Pembina’s contracted assets, investment-grade secured counterparties, and momentum in the base business are likely to drive its fee-based cash flows in the coming years, in turn, support its monthly payouts. Meanwhile, recovery in demand, higher volumes and pricing, new projects, and significant backlog suggest that Pembina remains well positioned to deliver robust cash flows and increase its future dividends. Also, Pembina stock is trading cheaper than its peers and looks attractive at current levels.
AltaGas owns a robust mix of low-risk utility assets and high-growth integrated midstream business that drives its cash flows, in turn, its dividends and stock price. The company’s rate-regulated utility business provides stability and growth and supports higher dividend payments.
Notably, revenue and rate base growth in its utility segment and increased spending on the accelerated capital program is likely to drive its overall revenues and cash flows in the coming years. The company expects to generate nearly 60% of normalized EBITDA in 2021 from the utility business and announced a 4% hike in its annual dividends. I believe the continued revenue growth, operational cost optimization initiatives, and customer growth are likely to drive strong growth in the utility segment.
Meanwhile, higher global export volumes and integration and optimization of Petrogas are likely to accelerate growth in its midstream operations and are likely to support its future earnings and cash flows. AltaGas pays a monthly dividend of $0.08 a share and offers a decent yield of 4.5%.
NorthWest Healthcare Properties
NorthWest Healthcare Properties REIT pays a monthly dividend of $0.07 a share, reflecting a yield of 6.1%, which is very safe. Notably, NorthWest Healthcare owns a low-risk and high-quality portfolio of diversified healthcare real estate assets that deliver solid cash flows and support its regular dividend payments. Furthermore, its strategic acquisitions accelerate its growth and drive its financials.
NorthWest Healthcare’s occupancy rate remains very high at 97.1%. Meanwhile, more than 80% of its tenants have government support that lowers risk and adds stability. About 73% of its rents are inflation-indexed, and the company has a long lease expiry term of approximately 15 years, which reduces price and vacancy risk.
NorthWest Healthcare is deleveraging its balance sheet and focusing on increasing fee income. Further, its recent acquisitions are increasing its scale, expanding its reach, and cementing its position in high-growth markets.
I believe NorthWest Healthcare’s low-risk business model, robust development pipeline, strategic acquisitions, and geographic expansion could continue to fuel future growth and drive its dividend payments.
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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 recommends ALTAGAS LTD., NORTHWEST HEALTHCARE PPTYS REIT UNITS, and PEMBINA PIPELINE CORPORATION.