Canadian Investors: Earn Over $400/Month With These 3 Cheap Dividend Stocks

Given their stable cash flows, excellent track record, and high dividend yield, these three dividend stocks could boost your passive income.

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Amid rising Omicron infections worldwide, it is better to supplement yourself with passive income. Investing in high-yielding dividend stocks is one of the cheaper and convenient ways to earn passive income. The following three cheap Canadian stocks currently pay dividends at a healthier yield of over 6.5%. So, if you invest the entire permitted amount of $76,500 in these three Canadian stocks through your TFSA account, you can earn a tax-free passive income of over $400 per month.

Enbridge

Amid rising COVID-19 cases, the energy sector has been under pressure, including Enbridge (TSX:ENB)(NYSE:ENB). The company has lost over 11% of its stock value from last month’s highs. Meanwhile, the correction offers an excellent buying opportunity for investors, given its excellent track record, attractive forward dividend yield and a cheaper forward price-to-earnings multiple of 15.8.

Last week, Enbridge’s management provided the guidance for the next year, with its adjusted EBITDA and DCF per share expected to grow by 9% and 10%, respectively. Meanwhile, the company also raised its monthly dividend by 3% to $0.86 per share, marking the 27th-year of a consecutive dividend hike. Its forward yield currently stands at an impressive 7.16%. Given its predictable cash flows due to highly-regulated business, planned investment in secured growth projects and a healthy liquidity position of $10 billion, I believe its dividends are safe.

Pembina pipeline

With a forward dividend yield of 6.71%, Pembina Pipeline (TSX:PPL)(NYSE:PBA) would be my second pick. The company generates over 90% of its adjusted EBITDA from take-or-pay, cost-of-service and fee-for-service, thus delivering stable and predictable cash flows. Supported by these solid cash flows, the company has increased its dividends at a CAGR of 4.9% over the last 10 years.

Meanwhile, Pembina Pipeline’s growth prospects look healthy, with around $5 billion of current or potential projects. The company’s management expects its adjusted EBITDA to come in the range of $3.35 – $3.55 billion compared to $3.3 – $3.4 billion in 2021. With its healthy liquidity of $2 billion and a payout ratio of 61%, the company could continue paying dividends at a healthier yield.

Besides, the company’s valuation also looks attractive, with its forward price-to-sales and forward price-to-earnings standing at 2.7 and 14.8, respectively. So, Pembina Pipeline would be an excellent addition to your portfolio.

Keyera

Keyera (TSX:KEY), an energy infrastructure company, has lost over 22% of its stock value from its June highs. Income-seeking investors should utilize the correction to accumulate the stock given its healthy growth prospects and attractive dividends. Currently, the company earns around 70% of its cash flows from fee-for-service and take-or-pay contracts, thus providing stability to its cash flows. Supported by these stable cash flows, the company has raised its dividends at a CAGR of 7% since 2008. Its forward yield currently stands at a juicy 6.94%.

Meanwhile, in July, Keyera started its Wildhorse crude oil storage and blending terminal, adding 4.5 million barrels of storage capacity. It is also building a KAPS pipeline project, which could become operational in early 2023. These investments could boost its financials in the coming years. With liquidity of $1.4 billion and minimal debt maturities over the next five years, the company is well-equipped to fund its growth initiatives and pay dividends.

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 Enbridge, KEYERA CORP, and PEMBINA PIPELINE CORPORATION. Fool contributor Rajiv Nanjapla has no position in any of the stocks mentioned.

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