Amid the rising volatility in the equity markets, investors could strengthen their portfolios by adding high-quality dividend stocks. So, if you are ready to invest, here are three stocks that generate steady cash flows and pays dividends at a healthier rate.
The rising concerns over higher pollution levels have accelerated a shift toward renewable energy. So, amid this favourable trend, I have selected TransAlta Renewables (TSX:RNW) as my first pick. It operates or has an economic interest in 44 power-generating facilities, with a total capacity of 2.5 gigawatts.
Meanwhile, the company acquired three more power-generating facilities from TransAlta Corporation in May. These acquisitions increased its power generating capacity by 303 megawatts. Besides, the company sells its power through long-term contracts, with the weighted average contract life standing at 12 years. These long-term contracts protect its financials from price and volume fluctuations, thus delivering stable earnings and cash flows.
Besides, TransAlta Renewables has a strong pipeline of projects, which can increase its power-generating capacity by 2.9 gigawatts. So, the company’s growth prospects look healthy. The company also pays monthly dividends. It has hiked its dividends at a compound annual growth rate (CAGR) of 3% since going public in 2013. Currently, the company’s forward dividend yield stands at 4.33%.
In this digitally connected world, the demand for reliable and high-speed communication networks is rising. So, Telus (TSX:T)(NYSE:TU) would be an excellent bet right now. Meanwhile, the company has accelerated its capital spending to expand its 5G and broadband coverage.
It has planned to invest $3.5 billion annually in 2021 and 2022. However, after the completion of its accelerated broadband build in 2022, its capital spending could fall to $2.5 billion in 2023.
Meanwhile, Telus acquired Playment earlier this week, strengthening its capabilities to support large tech companies developing AI-powered solutions. Besides, the company is also focusing on expanding its high-growth verticles, such as TELUS International, TELUS Health, and TELUS Agriculture. All these factors could boost its financials in the coming quarters.
Meanwhile, Telus pays quarterly dividends of $0.3162, with its forward dividend yield stands at 4.55%. Given its healthy growth prospects and juicy dividend yield, I am bullish on Telus despite the volatility.
My final pick would be Extendicare (TSX:EXE), which provides care and services to senior Canadian citizens under various brands. Amid the pandemic, its occupancy rate has declined. However, its top line grew by 18.6% in the March-ending quarter amid the support of $55.4 million from COVID-19 funding. Its adjusted EBITDA increased by $7.6 million to $27.7 million.
Supported by these strong financials, the company’s stock price has risen by 26.5% this year, comfortably outperforming the broader equity markets.
Meanwhile, I expect the rally to continue, as the demand for the company’s services could rise in the coming years amid a growing aging population and increasing income. Meanwhile, the company is working on expanding its capacity and replacing its aged facilities.
It is currently building nine new projects worth $500 million. The favourable industry trend and Extendicare’s growth initiatives could drive its financials in the coming quarters.
Besides, the company also pays monthly dividends of $0.04 per share, with its forward dividend yield standing at 5.71%. So, Extendicare would be an excellent buy for income-seeking investors.
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.
The Motley Fool recommends TELUS CORPORATION. Fool contributor Rajiv Nanjapla has no position in any of the stocks mentioned.