2 Red-Hot Dividend Stocks I’d Buy in February 2022

These two Canadian, high-dividend stocks could help you generate reliable income if you buy them now.

| More on:
Target. Stand out from the crowd

Image source: Getty Images

The TSX Composite benchmark has seen a correction in the last couple of months mainly due to a sharp selloff in tech stocks. As most high-growth stocks continue to look overvalued, investors might continue to shift their attention towards fundamentally strong and reliable dividend stocks. This increased buying is one of the reasons why most dividend stocks have remained unaffected by the recent broader market weakness.

Let’s take a closer look at two such top Canadian dividend stocks that could help you receive handsome returns on your investment in the long run.

Labrador Iron Ore stock

Labrador Iron Ore Royalty (TSX:LIF) is a Toronto-based company with slightly more than 15% equity interest in Iron Ore Company of Canada (IOC). Labrador Iron Ore currently has a market cap of about $2.7 billion, and its stock offers an amazingly high dividend yield of more than 13%.

The ongoing trend in the company’s financials looks impressive, as its adjusted earnings rose by 82.2% YoY (year over year) to $1.64 per share in the September quarter. IOC’s iron ore production remained strong in the fourth quarter, which could help Labrador post strong financial results for another quarter.

Also, the ongoing recovery in iron ore prices is likely to help IOC improve its profitability in the near term and help Labrador stock keep its bullish trend intact. These are some of the key factors that make this dividend stock in Canada worth buying right now. Investors’ rising expectations from its coming earnings could be the reason why LIF stock has already inched up by 14% in 2022 so far.

Pembina Pipeline stock

Pembina Pipeline (TSX:PPL)(NYSE:PBA) could be another great Canadian dividend stock to add to your portfolio in February. This Calgary-based energy transportation company currently has a market cap of about $23 billion, as its stock trades at $40.90 per share with about 7% year-to-date gains. At the same time, PPL stock has a strong dividend yield of about 6.2%.

Pembina Pipeline’s total revenue fell by about 14% in 2020 due to a sudden slump in demand for energy products due to the pandemic. Nonetheless, the company’s revenue consistently exceeded Street analysts’ estimates for the last three quarters in a row in 2021. In the latest reported quarter ended in September 2021, its top line rose by 37% YoY to $2.1 billion. Rising demand for energy products, along with stronger commodity prices, helped Pembina post strong financial growth last year. As a result, its adjusted earnings in Q3 2021 increased by 98% YoY to $1.01 per share, beating analysts’ estimates by about 50%.

Crude oil prices are currently hovering close to their highest level since 2014. This factor could also help energy companies, including Pembina Pipeline improve their profitability further in the coming quarters. Apart from these positive expectations, the company’s long track record of generating industry-leading returns for its investors with a strong balance sheet makes its high dividend-paying stock worth considering at the moment. It’s also important to note that Pembina Pipeline rewards its investors with monthly dividends, which could help you generate consistent and reliable passive income.

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 PEMBINA PIPELINE CORPORATION. Fool contributor Jitendra Parashar has no position in any of the stocks mentioned.

More on Dividend Stocks

Payday ringed on a calendar
Dividend Stocks

3 Top TSX Passive-Income Stocks That Pay Out Every Month

Here are some of the best TSX stocks for passive monthly income. Investors should explore to see if they're a…

Read more »

edit Sale sign, value, discount
Dividend Stocks

3 Remarkably Cheap TSX Stocks to Buy Right Now

These three cheap TSX stocks are some of the best buys on the TSX, and yet their share price is…

Read more »

think thought consider
Dividend Stocks

This Dividend Stock Could Create $1,353 in Passive Income in 2024

This dividend stock can create massive passive income from two sources, so don't miss out before a recovery in 2024!

Read more »

Increasing yield
Dividend Stocks

TFSA Investors: Buy This Top Bank Stock for High-Yielding Dividends

Generate a superior passive-income stream by investing in this high-yielding dividend stock from Canada’s Big Six banks.

Read more »

grow money, wealth build
Dividend Stocks

2 of the Best TSX Dividend Stocks I Plan on Holding Forever

High-yield TSX dividend stocks, such as Enbridge, offer you tasty yields and trade at significant discounts to consensus price targets.

Read more »

Family relationship with bond and care
Dividend Stocks

TFSA Investors: 3 Cheap Canadian Stocks for Retirees

These three Canadian stocks are super cheap for retirees looking for a great buy that will last the test of…

Read more »

calculate and analyze stock
Dividend Stocks

CPP Disability Benefits: Here’s How Much You Could Get

Not everybody can get CPP disability benefits. If you want some passive income, consider investing in Royal Bank of Canada…

Read more »

growing plant shoots on stacked coins
Dividend Stocks

Boosting Your Monthly Income: TSX Stocks That Deliver

Dividend investing can boost regular or active incomes, especially select TSX stocks that pay monthly dividends.

Read more »