2 TSX Stocks to Buy With Dividends Yielding More Than 3%

Are you looking for some great income stocks that can provide growth, too? Here are two stellar TSX stocks to buy with dividends well over 3%.

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Finding the right mix of investments can take time and a lot of patience. When it comes to income stocks, that perfect mix often involves finding investments with higher yields. Fortunately, the market gives us plenty of options to pick from. Here are two TSX stocks to buy with dividends yielding more than 3%.

Stock #1: Bank of Nova Scotia

It would be nearly impossible to generate a list of income stocks with dividends yielding more than 3% without mentioning at least one of Canada’s big banks.

This time, that big bank is Bank of Nova Scotia (TSX:BNS)(NYSE:BNS). Scotiabank is neither the largest nor most well known of Canada’s big banks. What it does offer investors is a massive long-term upside.

Unlike its big bank peers that turned to the U.S. market for international growth, Scotiabank turned further south to Latin America. Specifically, the bank turned to the nations of Mexico, Chile, Columbia, and Peru. Those four nations are part of a trade bloc called the Pacific Alliance.

The Alliance is charged with improving trade between its members and removing tariffs. As a preferred and familiar lender operating throughout the region, Scotiabank has realized solid earnings from the region.

Long term, that growth is set to continue. Last month, Costa Rica began negotiations to become the fifth member of the trade bloc. Perhaps coincidentally, Scotiabank already has an established branch network in that country, too.

Scotiabank’s prominence in Latin America has paid dividends for the bank. Speaking of which, Scotiabank offers investors one of the juiciest dividends on the market. The current yield works out to a tasty 5.25%. That’s more than enough for Scotiabank to earn a place on any list of TSX stocks to buy with dividends yielding more than 3%.

To illustrate the earnings potential of that dividend, let’s look at a $40,000 investment. That investment in Scotiabank will generate a whopping $2,100 income in the first year alone.

Investors that don’t need to draw on that income yet can reinvest it, allowing it to grow further until needed. Finally, Scotiabank continues to provide handsome annual upticks to that dividend.

Stock #2: TransAlta Renewables

TransAlta Renewables (TSX:RNW) is another intriguing option to consider adding to a list of TSX stocks to buy with dividends yielding more than 3%.

TransAlta owns a growing network of renewable energy facilities that are located across Canada, the U.S., and Australia. There are two key reasons why investors will want to consider TransAlta.

First, as a renewable energy utility, TransAlta benefits from the same lucrative business model that its fossil fuel-burning peers follow. In other words, a recurring and secure revenue stream backed by long-term regulatory contracts that are known as power-purchase agreements (PPAs). In the case of TransAlta, many of the more than 40 facilities in its portfolio have PPA expiration dates well past 2030.

This makes TransAlta one of the safest long-term investments on the market, but there’s still more.

The second reason to note is the renewable energy aspect itself. Unlike its traditional peers, TransAlta already runs a renewable energy operation. This means the company doesn’t need to invest in costly transitions and upgrades that traditional utilities are now facing.

Instead, TransAlta can invest in growth and continue to offer its tasty dividend.

That dividend, which is distributed on a monthly cadence, works out to a juicy yield of 5.21%.

Final thoughts

Dividend stocks are great, but, like all stocks, they are not without risk. That’s why it’s important to diversify your portfolio. Fortunately, both TransAlta and Scotiabank are stellar investments that offer some defensive appeal in addition to growth.

In my opinion, one or both should form part of any well-diversified portfolio.

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 Demetris Afxentiou has positions in The Bank of Nova Scotia. The Motley Fool recommends BANK OF NOVA SCOTIA.

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