Dividend Earners: 3 Cash Cows to Boost Income Instantly!

The choppy movement of the TSX in recent weeks seems to indicate a rocky fourth quarter is ahead.

| More on:
Where to Invest?

Image source: Getty Images

Besides the pandemic, rising inflation could unsettle stocks. Hence, it would be wise to take the safety net approach in case the market corrects. Dividend investors are winners in an inflationary environment because they have a hedge against inflation.

Purchasing power decreases when inflation is high, and therefore, money loses its value. Since dividend earners receive recurring income streams, they can temper the impact of inflation. Also, dividends are financial cushions when capital gains are hard to achieve in a falling market.

Canadians can boost their incomes instantly by investing in so-called cash cows. TC Energy (TSX:TRP)(NYSE:TRP), Alaris Equity Partners (TSX:AD.UN), and Nexus (TSX:NXR.UN) are the top high-yield stocks to purchase today. The respective businesses are financially healthy, so they could keep you whole on the payouts in down periods.

Dividend growth

The energy sector has been the most energized sector since the beginning of the year. Many of its constituents are making their comebacks following the COVID-19 year. The year-to-date gain is an incredible 59.72%. TC Energy investors, for instance, are happy with the 23.95% capital gain thus far in 2021.

Market analysts recommend a buy rating and forecast the share price of $61.48 to climb 12.23% to $69 in the next 12 months. However, if the market slides and the price drops, investors have a fallback in the 5.66% dividend. A $50,000 position in TC Energy will generate $2,830 in extra income or roughly $235.83 per month. The $60.55 billion energy infrastructure company attracts income investors because of its 21-year dividend growth streak.

Dividend titan

Alaris, a $794.93 million private equity firm, is a dividend titan. At only $17.53 per share, the dividend yield is a lucrative 7.41%. Any amount you invest will double in less than a decade. Moreover, the generous dividend payer isn’t a mediocre stock. Indeed, it outperforms the TSX year to date (+24.6% versus +15.5%)

The business model is unique. Alaris recapitalizes lower to middle-market companies in North America. Most of the companies it extends up to 75% equity are market leaders. Apart from the proven management team, the clients have historical free cash flows of $3 million or more. However, companies must have a low risk of obsolescence.

In Q2 2021, Alaris achieved a milestone. The $34.9 million revenue was the largest quarterly revenue in the company’s history. Its earnings growth (per unit results) in the first half of the year versus the same period in 2020 was 212%.

Dividend consistency

Nexus is one of the top performers in the real estate sector. This $556.2 million real estate investment trust (REIT) is relatively new on the TSX but has charmed many dividend earners already. Also, the gain since its debut on February 4, 2021, is 59.9%. Had you invested $25,000 then, your money would be worth nearly $40,000 today.

The real estate stock trades at $12.74 per share and pays a flat 5% dividend. Nexus should have no problems with dividend consistency. It owns and operates high-quality office and retail properties, but more industrial properties. Management is on the lookout for growth opportunities to scale further.

Follow the lead

Follow the lead of dividend earners. They can cope with inflation and accelerate payback on investment in the absence of a capital gain.

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 Christopher Liew has no position in any of the stocks mentioned. The Motley Fool recommends Alaris Equity Partners Income Trust.

More on Dividend Stocks

Double exposure of a businessman and stairs - Business Success Concept
Dividend Stocks

Is Exchange Income Stock a Buy?

Even within an industry, some stocks might be worth considering in certain market conditions, while others may be avoided.

Read more »

Dividend Stocks

2 Top Canadian Value Stocks in June 2023

Canadian Imperial Bank of Commerce (CIBC) stock is a compelling buy in June, and so is this Canadian REIT.

Read more »

Illustration of bull and bear
Dividend Stocks

2 Cyclical Stocks to Buy Before the Next Bull Market

The TSX index has been cyclical in the past 12 months, with neither a bearish nor a bullish trend fully…

Read more »

calculate and analyze stock
Dividend Stocks

Dividend Investors: 4 Canadian Stocks for Many Decades of Payouts

Are you looking for decades of dividends? These four top Canadian income stocks are ideal for steady compounding returns.

Read more »

railroad with nature background
Dividend Stocks

CNR Stock Sagged 2% Last Month: Should You Buy the Dip?

CNR stock has surged 1,760% since June 2003 after adjusting for dividends. But is the TSX blue-chip stock a buy…

Read more »

stock analysis
Dividend Stocks

Just Starting to Invest? The 2 Stocks You’ll Want to Buy and Own for Years

When building your portfolio from scratch as a beginner investor, it's a good idea to play it safe with relatively…

Read more »

Growing plant shoots on coins
Dividend Stocks

3 TSX Dividend Stocks With Lucrative Yields in June 2023

Dividend stocks pay you for holding their shares. Aim to buy at a discount to maximize your income while preserving…

Read more »

Pixelated acronym REIT made from cubes, mosaic pattern
Dividend Stocks

The Top Canadian REITs to Buy in June 2023

Canadian investors looking for passive income from real estate investing can consider these top Canadian REITs for monthly income.

Read more »