Every Canadian who begins stock market trading dreams of becoming a successful investor, but the approach to success can be different from one investor to the next, depending on what their goals and objectives are. Many investors want to turn a quick profit through riskier investments.
While the approach might work if you are lucky to invest in a high-growth company that has managed to provide you with significant returns, it might not be suitable for everyone.
If you want to enjoy sustained and long-term wealth growth as a stock market investor, it is crucial to properly balance your portfolio. Dividend investing is an excellent way for investors to enjoy returns on their investments while waiting for capital gains.
Today, I will discuss two high-yield dividend stocks that you should buy to capitalize on inflated dividend yields and capital gains for substantial long-term wealth growth.
Enbridge (TSX:ENB)(NYSE:ENB) is a top pick for many Canadian investors seeking a dividend stock that offers a high but sustainable dividend yield. The $103.01 billion market capitalization energy infrastructure company is trading for $50.85 per share at writing and boasts a juicy 6.57% dividend yield.
Enbridge stock’s attractive dividend yield alone would make the stock an excellent pick for investors. Combined with its solid growth prospects, it would be unwise not to buy its shares at its current price. Analysts expect the company to register adjusted earnings of over 15% higher for fiscal 2021 after recovering from the pandemic-induced challenges that took its earnings down by 8.7% in fiscal 2020.
Enbridge stock is up by 24.48% year to date after a strong rally in the energy sector this year and could provide you with stellar shareholder returns through its capital gains and reliable shareholder dividends.
Pembina Pipeline (TSX:PPL)(NYSE:PBA) is another top pick for income-seeking Canadian investors and a favourite among monthly income-seeking long-term investors. The energy transportation company boasts a market capitalization of $22.35 billion. At writing, the stock is trading for $40.64 per share and pays its shareholders their dividends at a juicy 6.20% yield.
Unlike many of its peers in the energy sector, Pembina Pipeline does not have oil-producing operations. Instead, it primarily focuses on providing energy transportation and midstream services. While commodity price fluctuations don’t have a significant impact on its revenues, the dwindling demand for the commodities caused a lot of problems for the company.
The rising demand for its services with economies reopening worldwide has helped the company recover quickly from its pandemic-induced lows. A stronger outlook for the energy sector as the world slowly moves into a post-pandemic era makes it one of the best dividend-paying stocks that you can find on the TSX right now.
Investing in dividend stocks can let you generate significant returns through capital gains as the share prices appreciate and line your account balance with cash through shareholder dividends. You can choose to reinvest the dividends through a dividend reinvestment plan to unlock the power of compounding and accelerate your wealth growth.
Picking high-quality companies with wide enough economic moats to weather harsh operating environments while providing you with consistent returns is the key to making the most of your investment capital for long-term success. Enbridge stock and Pembina Pipeline stock could be ideal assets to buy and hold for this purpose.