Turbulent markets have a disproportionate impact on some stocks. While TSX stocks have dropped 10%, growth stocks have faltered 30-50% this year. At the same time, dividend stocks are relatively well placed and could continue to outperform indices. Although they have been comparatively resilient, their recent pullback has made them even more attractive for long-term investors.
Here are top Canadian dividend stocks that are relatively cheap.
Enbridge
Canada’s top energy pipeline company Enbridge (TSX: ENB)(NYSE: ENB) is a classic defensive stock with its superior yield and stable earnings profile. Though ENB stock is currently trading close to its all-time highs, it’s valued relatively cheaper than its peers.
Notably, Enbridge belongs to the volatile energy sector, but it is a relatively safe bet. This is because its earnings are largely immune to unstable crude oil and natural gas prices. So, when crude oil rises sharply, its earnings do not see a notable jump, nor do they fall much when oil prices slump.
This earnings stability has mainly been behind its healthy dividend profile. It currently yields 6%, higher than its peers. So, investing $1,000 in ENB stock today will fetch you $60 in dividends annually.
ENB has increased its dividends for the last 27 consecutive years. And based on its stable business model and earnings profile, it will likely keep raising shareholder payouts in the future as well.
BCE
Telecom giant BCE (TSX: BCE)(NYSE: BCE) is another high-yielding stock among the Canadian bigwigs. As stated earlier, it is the stable financials that matter when we look for reliable dividends.
BCE also has a long dividend payment history and currently yields 6%. So, if you are looking for low-risk moderate return options, BCE should be on your watchlist.
Telecom companies earn stable cash flows, even when the broader economy is bad. That’s because of their low-risk, regulated business model and stable demand for their services. So, BCE has seen slow-but-stable earnings growth for the last several years.
Despite being defensive, BCE stock has been weak amid broad market pressures. It has dropped 15% in the last three months, making it an appealing bet for long-term, income-seeking investors.
Emera
Utility stocks are perceived as some of the best defensives due to their regular dividends and slow-moving stocks. Canada’s top utility stock Emera (TSX: EMA) is another stable, dividend-paying name to add to your income portfolio.
Emera is a utility company that distributes regulated electricity and natural gas, along with operations in energy midstream segments. It makes nearly two-thirds of its earnings from the United States.
EMA stock currently yields 4.3%, relatively lower than the above two. However, it has increased its payouts by 10% in the last five years. So, investors can expect consistently growing dividends from Emera in the future.
EMA stock is trading 8% lower than its all-time highs. Given its decent yield and stable earnings growth, EMA stock seems like a decent defensive bet in these uncertain markets.
