The crash in the price of Bitcoin and other cryptocurrencies is picking up steam. Investors who got burned by betting on the digital currencies in the past 18 months are now looking for safer places to invest their remaining cash.
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Cryptocurrency implosion
Bitcoin trades for less than US$23,000 at the time of writing. This is down from the 2021 high around US$67,000 and back to the lowest level since late 2020. The crash has wiped out gains for anyone who purchased Bitcoin in 2021 or 2022. Ongoing volatility should be expected and traders might make some quick profits on a bounce, but the trend isn’t your friend right now, and significant additional downside is possible in the coming weeks and months.
Investor confidence in the crypto sector is waning, and the latest rush to dump Bitcoin could be the signal that more pain is on the way. Where things go from here is anyone’s guess, but it wouldn’t be a surprise to see a new wave of panic selling after a short rebound, as remaining Bitcoin holders scramble to get out while they can still recover some capital.
Bitcoin holdings are largely short-term speculative bets. As inflation soars, and people find it harder pay the mortgage or put food on the table, the Bitcoin exodus could pick up steam. Those who have exited their Bitcoin positions and still have some excess cash to invest might be looking for more reliable investments that provide predictable and growing dividends.
BCE
BCE (TSX:BCE)(NYSE:BCE) is a good stock for investors who simply want to buy shares and forget about the position while it steadily puts more cash in their pockets. The communications giant generates strong cash flow from essential services, including mobile and internet subscriptions. BCE has the ability to raise prices when it needs additional funds to offset rising costs and enjoys a strong balance sheet that enables it to make the billions of dollars of investments required to keep the network infrastructure updated.
BCE provides a generous dividend supported by rising free cash flow. The board typically raises the dividend by about 5% per year. BCE stock looks undervalued right now, and investors who buy the shares at the current price near $66 per share can pick up a 5.6% dividend yield.
Enbridge
Enbridge is another cash-flow machine that investors can rely on for attractive and growing dividends. The energy infrastructure giant moves 30% of the oil produced in Canada and the United States and 20% of the natural gas used by American homes and businesses.
Demand for North American oil and natural gas is expected to grow in the coming years, as international buyers seek out reliable sources of the fuels. Europe plans to replace Russian gas with liquified natural gas (LNG) from the United States. Enbridge recently announced plans to build new pipelines to bring gas to LNG sites on the Gulf Coast. Oil exports are also ramping up amid sanctions on Russia. Enbridge bought an oil export platform for US$3 billion last year.
The company expects distributable cash flow to rise by 5-7% per year over the medium term. This should support steady dividend increases. Enbridge raised the dividend in each of the past 27 years.
Investors who buy the stock at the time of writing can pick up a 6% dividend yield.
The bottom line on top dividend stocks
BCE and Enbridge might not be as exciting and Bitcoin, but their high yields make them income rock stars. If you have decided to give up on cryptocurrencies and now want reliable and growing passive income from your savings, BCE and Enbridge deserve to be on your radar.
