Buying high-dividend-paying stocks is one of the best ways for long-term investors to keep getting regular income. While picking dividend stocks, investors must also pay attention to the business fundamentals. Businesses with strong fundamentals usually continue rewarding their investors with high dividends, even in uncertain economic times. Here are three of such fundamentally strong Canadian energy stocks that pay high dividends to their investors.
The Canadian energy infrastructure firm Enbridge (TSX:ENB)(NYSE:ENB) is one of the best dividend stocks to buy in August. The company-owned liquids pipelines transport a big portion of the crude oil and natural gas produced in North America.
Enbridge’s strong balance sheet and cash flow allow it to pay high dividends to investors, even in uncertain times. For example, its dividends increased by nearly 10% in 2020 to $3.24 per share, even after the global pandemic affected its results. A sharp recovery in energy demand is likely to drive massive gains in ENB’s earnings this year. That’s why Street analysts expect its 2021 earnings to be higher than the pre-pandemic (2019) levels. Apart from its significantly improving fundamentals, Enbridge stock also has an outstanding dividend yield of 6.8% at the current market price of $49.45 per share.
Pembina Pipeline stock
Pembina Pipeline (TSX:PPL)(NYSE:PBA) is another great high-dividend-yielding Canadian stock to buy today. The stock has already risen by nearly 37% this year, but its strong fundamentals give it room to inch up further in the long term.
In the March quarter, Pembina Pipeline reported a strong 22% year-over-year rise in its revenue after COVID-19-driven demand issues took its 2020 revenue down by 14%. The company’s cost-cutting efforts coupled with stronger demand are likely to help Pembina’s earnings recovery this year. The energy firm will release its second-quarter results later this week on Friday, which I expect to showcase continued strength in its financials.
Like Enbridge, Pembina Pipeline’s strong cash flow allows it to consistently reward investors with high dividends. In the last five years, Pembina Pipeline’s annual dividends increased by about 40% to $2.52 per share in 2020 from $1.80 per share in 2015. Currently, the stock offers an impressive dividend yield of 6.1%.
Gibson Energy stock
I find the shares of Gibson Energy (TSX:GEI) — another Calgary-based energy infrastructure company — really attractive for dividend investors at the moment. Despite its notable improvements in its 2021 outlook, its stock hasn’t seen much appreciation. GEI stock is currently trading with only 13.3% gains against a more than 16% rise in the TSX Composite Index. At the market price of $23.30 per share, Gibson Energy stock has a strong dividend yield of nearly 6%.
The company’s recently released second-quarter results showcased a strong recovery in its revenues from their pandemic phase lows. While this reduced margins and higher commodity market volatility badly affected its bottom line in the last quarter, some of its new projects and expanding infrastructure boost its future earnings-growth outlook. That’s why long-term investors may consider buying Gibson Energy stocks on a dip after its Q2 results this week.
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 owns shares of and recommends Enbridge. The Motley Fool recommends PEMBINA PIPELINE CORPORATION. Fool contributor Jitendra Parashar has no position in any of the stocks mentioned.