The Best TSX Dividend Stocks With Yields of at Least 5%

These TSX stocks have well-protected and high yields of at least 5%.

Sneha Nahata

Sneha is a M.Sc. in finance and has been a Motley Fool contributor since mid-2020. Sneha specializes in writing about bank, energy, consumer and TMT (technology, media, and telecom) stocks. She focuses on identifying winning long-term stock picks.

Published March 14, 2022 2:45 pm EDT

If you are searching for dividend stocks, consider buying the shares of the companies that can consistently grow their earnings. While several Canadian companies pay dividends, let’s look at companies with a solid earnings base. Moreover, these corporations have been paying dividends for a long time and are offering yields of at least 5%.

TC Energy

With a dividend yield of 5.1%, TC Energy (TSX: TRP)(NYSE: TRP) is the first stock on this list. It operates a highly resilient business that generates strong cash flows to support its payouts. It increased its dividend for 22 years in a row and expects to grow, without interruption, in the future.

Its diversified portfolio of regulated and contracted assets, high utilization rate, $24 billion secured capital projects, and ongoing momentum in the existing assets are expected to boost its adjusted EBITDA and, in turn, its dividend payments. Further, benefits from additional sanctioned projects and cost-savings initiatives augur well for future earnings growth.

Thanks to the strength in its business and visibility over future cash flows, TC Energy expects its dividend to grow by 3-5% per annum, thus making it a solid investment to generate a growing income.

Capital Power

Capital Power’s (TSX: CPX) conservative business mix and its ability to generate growing cash flows through the contracted and merchant portfolio make it a solid income stock. It’s worth noting that Capital Power has consistently increased its dividend for eight years. Meanwhile, it offers a yield of 5.45 at current levels.

Looking ahead, the company remains upbeat to generate strong cash flows and increase its dividend by 5% per annum through 2025.

Its diversified portfolio of renewable assets and strong developmental pipeline will likely drive its growth. Moreover, its payout ratio of 45-55% is sustainable. Capital Power stock is also trading cheaper than its peers. It trades at an EV/EBITDA multiple of 7.7, which compares favourably to its peer group average.

NorthWest Healthcare Properties REIT

NorthWest Healthcare (TSX:NWH.UN) is a reliable stock offering a high yield of 5.7%. It’s worth noticing that NorthWest Healthcare’s portfolio of healthcare real estate assets remains immune to the volatility in the market and generates steady cash flows.

Its government-backed tenants, high occupancy rate, and long lease expiry term augur well for future dividend growth. Moreover, the majority of its rents are inflation indexed, which is encouraging. Overall, its defensive business, strategic acquisitions, and strong balance sheet position it well to boost its shareholders’ returns through regular dividends.

Enbridge

This dividend stock list would not be complete without Enbridge (TSX: ENB)(NYSE: ENB), which offers a stellar yield of 6.1%. It has been consistently growing its dividends for 27 years and remains on track to increase it further on the back of its diversified cash flows.

Further, its contractual framework, multi-billion secured capital program, acquisitions, and strength in the base business indicate that Enbridge could continue to grow its distributable cash flows at a healthy pace. Also, revenue inflators, the recovery in its mainline volumes, inflation-protected revenues, and productivity will likely support its payouts in the coming years.

Enbridge projects mid- to high single-digit growth in its distributable cash flows in the coming years, suggesting that its dividend could grow at a similar pace during the same period.