Spread the Risk: 3 Income Stocks Paying +4% Dividends

Canadians can diversify and spread the risks with only three income stocks paying dividends over 4%.

| More on:

A single-stock investment is no longer advisable in the current environment. While the stock market continues to grow, it remains unpredictable. Thus, investors create a stock portfolio instead of holding only one to mitigate the risks. Today, rising inflation is a major concern such that earning investment income is a must.

Fortunately, Canadians can spread the risks and still generate substantial extra income to cope with inflation. TELUS (TSX:T)(TSX:TU), Russel Metals (TSX:RUS), and Transcontinental (TSX:TCL.A) belong to different sectors but have one thing in common: all three are reliable income stocks paying dividends of more than 4%.

Top 5G stock

Canada’s second-largest telecommunications company will present its Q4 and full-year 2021 results today. Industry analysts expect TELUS to report at least 12.1% and 17.7% top- and bottom-line quarterly growth compared to Q4 2020. In Q3 2021, net income rose 12.4% versus the same quarter in 2020 due to higher EBITDA and operating income.

Whether TELUS beats earnings estimates or not, the dividend payouts should be safe and sustainable. Any slide in income is justifiable, given the continuing investments to improve the 5G infrastructure and ongoing expansion of services. Moreover, the telco stock is a Dividend Aristocrat owing to 18 consecutive years of dividend increases. At $30.62 per share, you can partake of TELUS’s 4.25 % dividend.

Growing dividends

Transcontinental is as prolific as TELUS when it comes to growing dividends. This industrial stock boasts a dividend-growth streak of 20 years. If you invest today ($20.77 per share), the dividend yield is 4.33%. The company maintains a 60% payout ratio, which means it retains earnings for business growth.

The $1.84 billion company derives revenue from its Packaging and Printing business segments, although the former is the main engine of long-term growth. Despite the 2.7% revenue increase and 0.8% drop in net income in fiscal 2021 versus fiscal 2020, management was satisfied with the results.

Because of investments in new production equipment, new contract signings, and new products, the company expects organic growth in its Packaging Sector for fiscal 2022. The volume in the Printing Sector should also recover. If the company generates significant cash flows, it would have the flexibility to pursue growth opportunities and strategic acquisitions. Debt reduction is also a top priority.

Lucrative dividends

Russel Metals is hard to resist because of its lucrative 4.77% dividend yield. The mining stock is a stable investment, given its 67.77% total return (18.79% CAGR) in three years. At $31.88 per share, the trailing one-year price return is 30.6%. Based on analysts’ forecasts, the price could climb past $40 in the next 12 months.

The $2.04 billion metals and steel distributor will also present its Q4 2021 and full-year results today. In the nine months ended September 30, 2021, Russel reported glowing numbers. Total revenue, adjusted EBITDA, and net income rose 51.7%, 325.4%, and 900% versus the same period in 2020. Cash from operating activities increased 17.7% to $312 million.

Stay invested and earn

Dividend investing is a must during these challenging times. Inflation is way above the central bank’s target range, so it would be best to stay invested and earn 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.

Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool recommends TELUS CORPORATION and TRANSCONTINENTAL INC A.

More on Dividend Stocks

money goes up and down in balance
Dividend Stocks

This 6% Dividend Stock Is My Top Pick for Immediate Income

This Canadian stock has resilient business model, solid dividend payment and growth history, and a well-protected yield of over 6%.

Read more »

ways to boost income
Dividend Stocks

1 Excellent TSX Dividend Stock, Down 25%, to Buy and Hold for the Long Term

Down 25% from all-time highs, Tourmaline Oil is a TSX dividend stock that offers you a tasty yield of 5%…

Read more »

Start line on the highway
Dividend Stocks

1 Incredibly Cheap Canadian Dividend-Growth Stock to Buy Now and Hold for Decades

CN Rail (TSX:CNR) stock is incredibly cheap, but should investors join insiders by buying the dip?

Read more »

bulb idea thinking
Dividend Stocks

Down 13%, This Magnificent Dividend Stock Is a Screaming Buy

Sometimes, a moderately discounted, safe dividend stock is better than heavily discounted stock, offering an unsustainably high yield.

Read more »

Canadian Dollars bills
Dividend Stocks

Invest $15,000 in This Dividend Stock, Create $5,710.08 in Passive Income

This dividend stock is the perfect option if you're an investor looking for growth, as well as passive income through…

Read more »

A Canada Pension Plan Statement of Contributions with a 100 dollar banknote and dollar coins.
Dividend Stocks

3 Compelling Reasons to Delay Taking CPP Benefits Until Age 70

You don't need to take CPP early if you are receiving large dividend payments from Fortis Inc (TSX:FTS) stock.

Read more »

A worker overlooks an oil refinery plant.
Dividend Stocks

Better Dividend Stock: TC Energy vs. Enbridge

TC Energy and Enbridge have enjoyed big rallies in 2024. Is one stock still cheap?

Read more »

Concept of multiple streams of income
Dividend Stocks

Got $10,000? Buy This Dividend Stock for $4,992.40 in Total Passive Income

Want almost $5,000 in annual passive income? Then you need a company bound for even more growth, with a dividend…

Read more »