Canadians have ways to endure recessions or prepare for a coming economic slowdown. Those who have developed the habit of saving and investing will not worry about financial dislocation. In the current environment, it would help to earn passive income to protect your financial well-being.
Dividend investing is the straightforward strategy to create passive income using your savings. However, a more rewarding option is picking industry leaders who pay the highest dividends in their respective sectors. You ensure steady, uninterrupted income streams that could last for decades.
Steady dividend growth since IPO
The 6.83% dividend yield of Keyera (TSX:KEY) should whet the appetites of income investors. Besides the high yield, this $6.19 billion energy infrastructure company is a known Dividend Aristocrat. The energy stock has compounded its dividend growth at 6% per year over the last 10 years. Note that the dividend growth has been steady since the company went public in 2003.
Such valuable information on its dividend history should give you the confidence to invest in Keyera. The company has three core business segments (gathering & processing, liquids infrastructure, and marketing) that contribute to total revenues. Its gathering system boasts of over 4,000 kilometres of pipelines. In Alberta, Keyera has interests in 14 active gas plants.
Last year wasn’t a good one income-wise, because impairment expenses due to the shutdown of gas plants resulted in a $62 million net loss. It was also part of Keyera’s asset-optimization program. Still, business growth is on the horizon. The Pipestone gas plant is newly commissioned, while the Wildhorse crude oil storage and blending terminal will commence operations in mid-2021. If you were to invest today, the share price is $28.02.
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Strong domestic and international presence
Bank of Nova Scotia (TSX:BNS)(NYSE:BNS), or Scotiabank, pays only 4.59% dividend, but it’s the highest dividend offer among the Big Five banks. Still, Canada’s third-largest bank is a reliable income stock if you want lasting passive income. All of the top five lenders have dividend track records of more than a century.
Scotiabank’s record is 189 years, and the bank stock’s total return over the last 48.25 years is 184,823.62% (16.87% CAGR). This $95.18 billion bank derives more than half of its total revenues from the domestic market. However, its presence in the U.S., Central America, Pacific Alliance, and the Caribbean is equally strong. Scotiabank also operates in Asia, Australia, and Europe.
Currently, Scotiabank’s vast network in the home country consists of 952 branches. Internationally, the over 1,400 branches and well-established franchises cater to around 10 million retail, corporate, and commercial banking clients. Besides the market in Canada, the bank’s business growth in 2021 should come from high-growth markets such as Chile, Colombia, Mexico, and Peru.
Scotiabank investors are gaining by 16.85% year to date. Like Keyera, Scotiabank is a Dividend Aristocrat. For fiscal 2020 (year ended October 31, 2020), the bank paid a total of $4 billion in dividends. Its share buyback for the year was $414 million. The dividend payouts should be safe, as the bank keeps the payout ratio checked (67.67%).
Please don’t settle for mediocre dividend stocks if you’re chasing after safe and secure passive income. You’ll sleep easy and be content with a pair of Dividend Aristocrats you can hold for a lifetime.
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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 Christopher Liew has no position in any of the stocks mentioned. The Motley Fool recommends BANK OF NOVA SCOTIA and KEYERA CORP.