Investing in dividend stocks has two main benefits. First, these stocks can help give your portfolio some stability during market downturns. Investors are learning this the hard way this year, as many growth stocks continue to fall heavily. The second benefit that dividend stocks provide is that they can significantly boost your income. By holding large enough shares of high-yield dividend stocks, investors can significantly supplement their income. Here are three top picks!
Buy this insurance company
In theory, insurance companies have a perfect business model. They receive recurring payments from customers. This provides the company with a very stable and highly predictable source of revenue. On the other hand, they lose money when covering incidents. Of course, no insurance company will be eager to hand out money, so investors can rest assured knowing the company will do its best to keep losses at a minimum.
If I could only buy one insurance company, it would be Manulife Financial (TSX: MFC)(NYSE: MFC). The company has more than $1 trillion of assets under management. That makes it the largest insurance company in Canada, and one of the largest in the world. Listed as a Canadian Dividend Aristocrat, Manulife has managed to increase its dividend for the past seven years. Currently, it offers investors a forward dividend yield of 5.22%.
Choose one of the Big Five banks
When it comes to investing in dividend stocks, the Big Five banks should always come to mind. Because of the highly regulated nature of the Canadian banking industry, these companies have established very formidable moats. In addition, Canadians should be very familiar with the Big Five banks, making them easier stocks to hold in your portfolio. Of that group, my top stock is Bank of Nova Scotia (TSX: BNS)(NYSE: BNS).
Bank of Nova Scotia is listed as a Canadian Dividend Aristocrat. It has managed to increase its dividend for over a decade. More impressively, Bank of Nova Scotia has managed to pay a dividend for 189 consecutive years. As of this writing, Bank of Nova Scotia offers investors a very attractive forward dividend yield of 4.40%.
This company is more than a telecom provider
Telus (TSX: T)(NYSE: TU) is one of the most recognized names in Canada. Alongside BCE, it operates the largest telecom network in the country. However, that’s not the most impressive aspect of this company. Telus has developed into a key competitor within the health care industry. Today, Telus offers many services to health care professionals as well as a telehealth app to consumers. If there’s one stock that I think could be a massive sleeper pick for the next decade, it’s Telus.
Like the other two companies here, Telus is listed as a Canadian Dividend Aristocrat. It has raised its dividend in each of the past 17 years. Currently, the stock offers investors a forward dividend yield of 4.09%. One thing to keep in mind is that Telus does have a higher dividend payout ratio. Historically, the company has done a good job of maintaining it at a level where it can continue to raise distributions. However, I would like to see a lower payout ratio in a general sense.
