Passive Income: 4 Top Stocks to Buy Today

Passive income is a great hedge in market volatility. Here are four top dividend stocks that look like very attractive investments today!

edit Businessman using calculator next to laptop

Image source: Getty Images.

Once again, Canadian stock markets are rotating from technology stocks to more cyclical and income-orientated stocks. Certainly, rising bond yields and inflation concerns are dampening the more highly priced Canadian tech plays.

Perhaps, if you have captured some great gains in 2021, now may be the time to convert those into enduring passive income. Here are four stocks Canadian investors may want to look at for stable, enduring dividend income.

A Canadian energy leader

A direct way to play the recent rise in energy prices is through Canadian Natural Resources (TSX:CNQ)(NYSE:CNQ). Today, it pays a good 4.1% dividend. Unlike many of its peers, CNQ was one of the only producers to not halt or drop its dividend when oil crashed last year. In fact, over the past five years, it has grown its dividend by a compounded annual rate of 12.5%!

It is one of Canada’s largest producers of oil and natural gas. It produces oil extremely efficiently (a barrel of oil costs around US$30). With oil climbing close to US$80 per barrel, it can kick out tonnes of free cash flow.

Consequently, I think this stock is primed to reward shareholders with share buybacks, dividend increases, and maybe even special dividends.

A top Canadian pipeline and midstream stock

Another indirect way to play rising energy demand is by owning energy infrastructure. Pembina Pipeline (TSX:PPL)(NYSE:PBA), with its network of pipelines, export terminals, midstream assets, and gas-processing facilities, looks to be well positioned. It pays a 6.3% dividend.

Natural gas has been an incredibly strong commodity. Pembina should benefit this year from rising volumes through its assets as well as strong energy pricing margins.

Like CNQ, this TSX stock never lowered its dividend through the pandemic. It has a solid opportunities to grow through organic development. It could also win from some major potential acquisition targets in the future (Trans Mountain Pipeline and/or Cedar LNG).

An American multi-family REIT

Inflation could persist longer than many would like. While commodities (like oil) can be a good hedge, so can real estate. Generally, property values and rental rates rise when economic factors heat up as well. That is why I really like BSR REIT (TSX:HOM.U). It owns resort-style multi-family properties in some of the fastest-growing cities in America.

In the past few years, the REIT has cycled out of lower-quality properties into very attractive, well-located, higher-rent properties. They are located in top Texas municipalities like Austin, Houston, and Dallas. These regions are seeing very tight occupancy and strong rental rate growth.

Its strategy is now paying off. In its most recent quarter, adjusted funds from operation (a key cash flow metric) grew year over year by 26.7%. Likewise, the value of its properties rose 21.9% year over year. Despite a strong growth outlook, this TSX real estate stock trades at a discount to its American peers. It pays a solid 3.2% dividend right now!

A global medical properties stock

For an elevated dividend yield in a different real estate sector, NorthWest Healthcare Properties REIT (TSX:NWH.UN) might be of interest. This stock pays a monthly distribution that equals to a 6% annual yield.

It operates a very high-quality portfolio of hospital and medical office properties across the world. Considering these properties are essential to society, they have very long leases that are backed by strong tenants.

Three-quarters of its properties have inflation-indexed leases. So, when inflation rises (as it is), its cash flows are appropriately hedged. This REIT is focusing on a broad joint-venture strategy. Over time, this should accrete steady fund flow growth. As a result, I believe its dividend-payout ratio will decline, and investors could see its valuation improve as well.

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 Robin Brown owns shares of BSR REAL ESTATE INVESTMENT TRUST and PEMBINA PIPELINE CORPORATION. The Motley Fool recommends BSR REAL EST INVST, NORTHWEST HEALTHCARE PPTYS REIT UNITS, and PEMBINA PIPELINE CORPORATION.

More on Dividend Stocks

A close up image of Canadian $20 Dollar bills
Dividend Stocks

How Much Cash Do You Need to Quit Work and Live Off Dividend Income

Toronto-Dominion Bank (TSX:TD) pays a lot of dividend income. Can you live off of it in retirement?

Read more »

An analyst uses a computer and dashboard for data business analysis and Data Management System with KPI and metrics connected to the database for technology finance, operations, sales, marketing, and artificial intelligence.
Dividend Stocks

Invest $10,000 in This Dividend Stock for $1,398.40 in Passive Income 

This dividend stock offers a whopping 11.9% dividend yield right now, with returns that should fly high for this cyclical…

Read more »

Person holds banknotes of Canadian dollars
Dividend Stocks

This 6.1 Percent Dividend Stock Is My Pick for Instant Income

Here’s what makes Transcontinental one of my top dividend stock picks right now for instant income.

Read more »

Pile of Canadian dollar bills in various denominations
Dividend Stocks

For a Shot at $5,000/Year in Passive Income, Buy 1,000 Shares of This TSX Stock

Do you know you can build passive income with TSX stocks? A $22,000 investment can give you a shot at…

Read more »

Paper Canadian currency of various denominations
Dividend Stocks

Beat the TSX With This Cash-Gushing Dividend Stock

A new Canoe EIT Income Fund (TSX:EIT.UN) investment could earn almost 9% yield annually, and the monthly dividend stock has…

Read more »

RRSP (Registered Retirement Savings Plan) on wooden blocks and Canadian one hundred dollar bills.
Dividend Stocks

RRSP Wealth: 2 Great Dividend Stocks to Own for Total Returns

Dividend stocks like Fortis Inc (TSX:FTS) can be great additions to a well-diversified portfolio.

Read more »

edit Sale sign, value, discount
Dividend Stocks

3 Cheap Stocks to Add to Your TFSA Before They Get Expensive

The stock market has some lucrative TFSA stocks trading at multi-year lows. Now is a good time to buy these…

Read more »

Hour glass and calendar concept for time slipping away for important appointment date, schedule and deadline
Dividend Stocks

How to Build a Bulletproof Monthly Passive-Income Portfolio With Just $10,000

Here’s how to build a diversified portfolio with dividend stocks that, as a group, pay out in every month of…

Read more »