This year, Canadian equity markets have delivered a stellar performance, with the benchmark index, the S&P/TSX Composite Index, increasing by 16%. However, rising inflation and expensive valuations have turned the equity markets volatile lately. So, investors can buy the following four Canadian stocks to strengthen their portfolios while also earning stable passive income.
Enbridge
Enbridge (TSX:ENB)(NYSE:ENB) operates 40 diverse assets, with 98% of its adjusted EBITDA generated from regulated assets or long-term contracts, delivering stable cash flows. These steady cash flows have allowed the company to pay dividends continuously for 66 previous years while increasing its dividend at a CAGR of 10% for the last 26 straight years. Currently, its dividend stands at a healthy yield of 6.7%.
Enbridge has planned to make a capital investment of $17 billion over the next three years, which could boost its adjusted EBITDA by $2 billion. Along with these investments, the recovery in oil demand could increase its asset utilization rate, thus driving its financials higher. Given its healthy growth prospects, steady cash flows, and strong liquidity of $9 billion, I believe its dividend is safe. So, Enbridge would be an excellent buy for income-seeking investors.
Northwest Healthcare
Similarly, Northwest Healthcare Properties REIT (TSX:NWH.UN) could be an excellent addition to your portfolio, given its highly defensive and diversified assets. It owns and operates healthcare properties across seven countries. Thanks to its long-term contracts and government-backed clients, the company enjoys high occupancy and collection rate. A significant part of its rent is inflation-indexed, which is encouraging.
Meanwhile, the company is also looking at expanding its footprint in Australia, the United States, and Western Europe. Currently, it is working on acquiring the Australian Unity Healthcare Property Trust, which owns 62 hospitals and medical facilities. It enjoys a high occupancy rate of 98% and a diverse tenant base with a weighted average lease expiry of 16 years. So, the acquisition could significantly boost NorthWest Healthcare’s cash flows, allowing it to pay its dividend at a healthier yield. Currently, the company pays a monthly dividend, with its forward yield standing at 6.15%.
BCE
BCE (TSX:BCE)(NYSE:BCE) is accelerating its capital spending to expand its 5G and broadband coverage across Canada. The company currently provides 5G service to 23 markets across Québec, Ontario, and Manitoba. Meanwhile, the company expects to expand the coverage to 70% of the Canadian population by the end of this year. The expansion could increase its customer base, boosting its financials.
The company could also benefit from the rising demand due to increased digitization and remote working and learning. It also recently collaborated with Amazon Web Services to enhance its customer experiences and modernize its applications and services. Further, its financial position also looks healthy, with its liquidity standing at $6.5 billion. So, the company is well equipped to continue raising its dividend. Currently, the company pays a quarterly dividend of $0.875 per share, with its forward dividend yield standing at 5.72%.
Keyera
An energy infrastructure company, Keyera (TSX:KEY), is my final pick. Thanks to its increasing asset base, the company has grown its DCF (discounted cash flow) per share at a CAGR of 9% since 2008. These robust cash flows have allowed the company to increase its dividend at an annualized growth rate of 7% during this period. It currently pays a monthly dividend of $0.16 per share, with its forward dividend yield standing at 5.59%.
Meanwhile, the company has planned to invest over $400 million this year, expanding its asset base. Along with these investments, the increasing oil demand amid economic expansion could drive its financials in the coming quarters. Given its healthy liquidity position of $1.5 billion and a payout ratio of 67%, Keyera’s dividend is safe.
