Dividend stocks are key for your portfolio. Recently, though, with fears of inflation increasing, some dividend stocks have been selling off as bond yields rise. So as we begin June 2021, it’s crucial that dividend investors ensure they’re buying only the best stocks.
Inflation makes some dividend stocks sell off for a few reasons because inflation devalues future cash flows. So investors want a higher yield to compensate them for this.
Plus, because interest rates will likely have to rise, bond yields also rise, which means bond prices fall. This typically causes all income assets to fall. So in this current environment, dividend investors need to be careful of inflation.
To combat inflation, we want stocks that can either consistently grow their dividends or ones that have the ability to pass on higher costs to their customers, such as those in the commodities industries.
So with that in mind, here are three top dividend stocks to buy in June 2021.
A top blue-chip dividend stock
Enbridge is an ideal dividend stock to buy today and hold forever. The company is a massive energy powerhouse in North America.
Its diverse and integrated operations are highly resilient, which makes the stock a lot less volatile than its energy industry peers. Enbridge ships tonnes of gas and oil and also owns a major utility company; it even has significant green energy assets. Plus, it offers significant growth potential over the long run, in addition to the growing dividend.
The dividend has been increased for 26 consecutive years now, including during the pandemic. Plus, it yields a significant amount, at roughly 7.1% today.
So if you’re looking for a top dividend stock to buy this month, Enbridge continues to be one of the most attractive in Canada.
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A top Canadian gold stock to buy in June 2021
It’s not often you think of gold stocks as dividend stocks, but B2Gold is one of the best in Canada and a major cash cow.
The company is one of the lowest-cost gold producers in the world. This is crucial because it gives B2Gold significant margins making the stock highly profitable.
So B2Gold can not only invest cash in future growth, but it can also return cash to shareholders. This makes it an ideal stock to buy in June 2021, especially with the potential that gold stocks have to rally in the second half of 2021.
Having some gold exposure is always ideal. It’s even more ideal, though, when your gold investment returns cash flow to you. So if you’re looking to add dividend stocks to your portfolio this month, I’d strongly consider B2Gold.
An exciting energy stock
Finally, another exciting dividend stock from the energy industry is Freehold Royalties (TSX:FRU). Freehold is an energy company that earns a royalty from all the energy produced on its lands.
The company owns millions of acres of land, has interests in over 40,000 wells and receives a royalty from more than 300 different companies. This is a lower-risk way of investing in energy and an ideal way for dividend investors to buy a top energy stock.
Freehold was impacted severely by the pandemic as production was curtailed. However, now that the pandemic is in the rearview and production is being ramped up in addition to the price of oil rising, Freehold is seeing a major recovery in its operations.
Since last December, the stock has increased its dividend three different times as the entire sector recovers. Today that monthly dividend yields over 5%, making Freehold one of the most attractive Canadian dividend stocks to buy in June 2021.
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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 danieldacosta owns shares of B2GOLD CORP., ENBRIDGE INC, and FREEHOLD ROYALTIES LTD. The Motley Fool owns shares of and recommends Enbridge. The Motley Fool recommends FREEHOLD ROYALTIES LTD.