Investors looking for quality income stocks on the TSX certainly have a lot of great options. However, picking the winners among the crowd is always the difficult part. In the high-yield space, this search becomes much more tricky.
However, I think these two stocks fit the long-term mandate of most investors. Here’s why I think investors should keep their eye on these two high-yielding bond proxies today.
Indeed, Enbridge (TSX:ENB)(NYSE:ENB) deserves a spot as a top high-yield play in this market. This energy infrastructure company’s dividend yield of 7% is among the juiciest of its peers, and one of the best in terms of current yield on the TSX today.
The reason this dividend is so attractive today is the stability of the cash flows Enbridge is able to provide. Pipeline players are popular among many long-term income investors for this reason. These companies provide extremely stable and growing cash flows over time. Indeed, in a strong energy bull market, I expect to see more upside momentum for Enbridge shares over the near to medium term.
However, from a long-term perspective, Enbridge has proven itself as one of the best total returns vehicles on the TSX. The company’s move into renewable energy sets up investors for very nice long-term growth, even if the company’s core business declines somewhat over the near term.
Additionally, Enbridge provides portfolio diversification that is hard to come by, for growth-heavy investors today. Those seeking to balance out growth names with high-quality, dividend-paying stocks can’t go wrong with Enbridge.
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Bank of Montreal
This large Canadian bank provides investors with a healthy 3.3% dividend yield. While certainly not the highest among its peers, BMO’s yield is still substantial relative to where bond yields are today.
Like Enbridge, I like the stability of BMO’s cash flows as a key reason to own this income stock. The company’s core lending portfolio has gotten a big assist from the Bank of Canada of late. With the yield curve steepening in the U.S., and to a lesser degree in Canada, BMO stands to benefit.
Like its Canadian banking peers, BMO has diversified its cash flows significantly outside Canada. The company’s focus on international growth markets is another reason to like this stock. Indeed, there is some decent long-term growth potential with BMO stock. Banks typically aren’t bought for such a profile. However, I view BMO as a unique Canadian banking play in this regard.
BMO has a robust track record of providing steady and consistent income to investors over the long term. For those with a long-term investing time horizon, this stock is a fantastic pick at these levels.
Like these top income picks? Here are a few more top growth picks we think you might like:
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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 stocks mentioned in this article. The Motley Fool owns shares of and recommends Enbridge.