Holding dividend-paying stocks in a well-diversified portfolio isn’t just for retirees. Given the emphasis that’s placed on growth stocks today, investors can often lose sight of the value dividends provide.
Indeed, dividend income is one-half of the total return calculation that can be forgotten by investors. For those looking to build serious wealth over the long term, finding great income stocks as a part of a well-balanced portfolio is a great idea.
There happen to be a range of great dividend-paying stocks on the TSX. However, these two stocks are among my top picks.
So, let’s dive in.
WPT Industrial REIT
The real estate sector is one that was hit hard by the headwinds brought on by the pandemic. However, those seeking defensiveness have done quite well holding shares in industrial REITs.
One such REIT that has outperformed the majority of its peers is WPT Industrial REIT (TSX:WIR.U). This industrial REIT offers investors access to a high-quality portfolio of distribution and logistics properties. The kicker? These assets are mainly located in the United States. Thus, WPT is a great diversification pick for those light on international exposure.
The size of WPT’s portfolio is also formidable. The company owns over 100 industrial properties in 20 states, accounting for more than 37 million square feet of industrial space.
On this foundation, the company has built some of the strongest fundamentals of its peers. WPT’s return on assets of 8.59% and return on equity of 18.67% heavily outperform the market average of 2.97% and 8.65%, respectively. These figures are among the best returns on the market, with profit margins almost four times the market average. This valuation, along with a 4.5% dividend yield, appears extremely attractive right now.
In relation to the sector, this yield is also formidable. The sector average of a 5.6% yield makes Enbridge’s dividend stand out.
Accordingly, some investors may have concerns about whether this dividend is sustainable or not. I think Enbridge’s business model and conservative capital-preservation strategies imposed in recent years make the answer yes.
Enbridge stock has actually outperformed more than 80% of its peers of late and continues to raise its dividend each year. This combination is rare, and I really do believe Enbridge is one of those few high-yielding stocks with the ability to maintain (or even grow) this yield over time.
This stock is currently trading around its 52-week high, making this yield even more remarkable. For those who have followed my top picks in recent years, Enbridge ought to stand out as a winner. The company’s likely to continue growing at its consistent CAGR of 9% over the very long term.
It’s a great pick.
Like these two dividend stocks? Here are a few other great growth stocks to consider right now:
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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 Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Enbridge.