The stock remains volatile amid the rapid spread of the Omicron variant of the coronavirus and significant selling in high-growth stocks. Despite the challenges, plenty of stocks consistently return a substantial amount of cash to their shareholders in the form of dividends and share repurchases and are trading cheap.
Let’s focus on three stocks offering solid dividend income and trading under $50.
Suncor Energy
Improving operating environment and higher price realization amid economic recovery has driven Suncor Energy’s (TSX:SU)(NYSE:SU) financials and, in turn, its ability to enhance its shareholders’ returns. Thanks to its strong adjusted funds from operations, Suncor reinstated its dividends to 2019 levels and accelerated the pace of debt reduction.
During the last reported quarter, Suncor delivered adjusted funds from operations of $3.14 billion, reflecting increased sales and higher crude oil price realizations. In 2021, Suncor returned $3.9 billion to its shareholders through share repurchases ($2.3 billion) and dividend payments ($1.6 billion). Further, the company reduced its net debt by $3.7 billion.
Overall, improving operating environment, higher crude and refined product realizations, and its focus on lowering the cash operating cost per barrel will likely drive its financials and, in turn, its dividend payments. Despite the volatility in the market, Suncor stock has increased by 53% in six months. Moreover, it offers a strong dividend yield of 4.6%.
Algonquin Power & Utilities
Its conservative business and regulated cash flows have enabled Algonquin Power & Utilities (TSX:AQN)(NYSE:AQN) to boost its shareholders’ returns through increased dividend payments for more than a decade.
I am upbeat about Algonquin Power & Utilities’s prospects, as its regulated and contracted assets could continue to drive its cash flows and dividend payouts. The company projects its rate base to increase at a CAGR of 14.6% over the next five years, which will likely boost its EBITDA and adjusted net earnings.
It’s worth noting that Algonquin Power & Utilities expects its adjusted net income to increase by 7-9% annually through 2026, which is encouraging and adds visibility over its future payouts. Moreover, strategic acquisitions and increasing renewable capacity bode well for growth. Algonquin Power & Utilities offers a well-protected yield of more than 4.7% at current price levels.
Telus
Next up is Telus (TSX:T)(NYSE:TU) stock. This telecom company has consistently delivered profitable revenue growth, acquired new customers, and delivered strong cash flows that support its dividend payments. Further, its diverse asset mix, cost efficiency, and solid balance sheet continue to support its growth.
It’s worth noting that Telus has returned nearly $20 billion to its shareholders since 2004, including $15 billion in dividends. Further, through its dividend-growth program, it has consistently raised its payments. Last quarter, Telus announced a 5.2% increase in its dividend. Moreover, Telus remains well positioned to increase its dividend further on the back of its strong financial performance, including the expansion of EBITDA and margins.
Overall, Telus’s ability to grow its customer base, accelerated pace of broadband expansion, and investments in the 5G network bode well for future growth and dividend payouts. Telus pays quarterly dividends and offers a yield of 4.3%.
