2 Safe Stocks to Own and Keep Receiving Passive Income

Canadian investors will likely keep receiving rock-steady passive income from two Dividend Aristocrats, notwithstanding the intensifying market pressure.

| More on:
edit Safety First illustration

Image source: Getty Images

Market pressure is intensifying heading into the fourth quarter of 2022, as central banks battle high inflation. If the Bank of Canada implement more rate hikes before year-end, economists fear it might drag the economy and usher in a recession. Meanwhile, income investors are worried about the safety of dividends in this uncertain market condition.

Rock-steady passive income

Canadians have solid investment choices in the utilities and telecommunications sectors. Dividend Aristocrats Algonquin Power & Utilities (TSX:AQN)(NYSE:AQN) and TELUS (TSX:T)(NYSE:TU) aren’t immune from the market volatility, but you should keep receiving rock-steady passive income, nonetheless.

Built for long-lived assets

Algonquin Power owns renewable energy and regulated utility assets across North America. The $11.5 billion company, through its subsidiaries (Liberty Power and Liberty Utilities), operates hydroelectric, wind & solar power facilities. It also has stable utility businesses like water, natural gas, and electricity.

Its president and chief executive officer (CEO) Arun Banskota said management has high confidence in Algonquin’s five-year $12.4 billion capital plan. Besides the large proportion of organic growth, it has growth levers, particularly in the regulated business. He added, “We see ourselves as a business built from long-lived assets and strong operations.” Both factors enable Algonquin to consistently produce stable financial results.

In the second quarter (Q2) 2022, the revenue and adjusted net earnings of US$624.3 million and US$109.7 million represent 18% and 19.6% increases from Q2 2021. Cash provided by operating activities rose 160% year over year to US$268.6 million. Arthur Kacprzak, Algonquin’s chief financial officer, stressed that operations are back to normal, and the liquidity position remains strong.

This utility stock has a raised its dividend for 11 consecutive years. If you invest today, the share price is $16.38 (-8.15% year to date), while the dividend yield is 5.64%.

Value stock

TELUS, one of the Big Three and the second largest in Canada’s telecommunications sector, is also a top value stock for its ever-growing customer base. The $39.7 billion telco provides essential telecommunications services and products, including wireless and wireline voice and data.

The 24,000 additions to TELUS’s Mobile and Fixed customers to 247,000 in Q2 2022 versus Q2 2021 was the strongest in a second quarter. According to management, the record customer growth reflects the strong demand for superior bundled offerings and customer loyalty programs. TELUS’s ability to deliver steady income streams to investors is unquestionable.

In the three months ended June 30, 2022, net income grew 44.8% to $498 million compared to a year ago. Its executive vice-president Doug French said, “Our second-quarter results showcase our consistent execution excellence and leading asset mix across our telecom and technology-oriented verticals.”

French added the run-rate on spending in 2023 would be lower, as the accelerated capital expenditure program winds down in 2022. Expansion into the healthcare and technology sectors are also growth catalysts. TELUS boasts a mean dividend-growth streak of 18 years. At $27.96 per share (-3.05% year to date), you can partake of the attractive 4.77% dividend yield.

Safer holdings

The threat of recession is real, but it shouldn’t discourage people from investing. Algonquin Power and TELUS are safer stocks to own for consistent, growing dividend payouts amid market uncertainties.     

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 Christopher Liew has no position in any of the stocks mentioned. The Motley Fool recommends TELUS CORPORATION. The Motley Fool has a disclosure policy.

More on Dividend Stocks

a person prepares to fight by taping their knuckles
Dividend Stocks

TFSA Investors: 2 High-Yield Heavyweights Worth a Sizeable Investment

SmartCentres REIT (TSX:SRU.UN) and another high-yield heavyweight to buy now while rates and fears remain high.

Read more »

Growing plant shoots on coins
Dividend Stocks

Buy These 3 High-Yield Stocks With Healthy Payout Ratios

The payout ratio is a good way to understand a dividend-paying company’s financial stability, and it’s a good way to…

Read more »

Hour glass and calendar concept for time slipping away for important appointment date, schedule and deadline
Dividend Stocks

Your Guide to the Best Monthly Dividend Stocks in Canada

Three of the best monthly dividend stocks in Canada have market-beating returns despite the elevated volatility in 2023.

Read more »

data analyze research
Dividend Stocks

Passive Income: How to Earn $1,191/ Per Year Tax Free

Make $1,191/year in tax-free passive income with these top TSX dividend stocks.

Read more »

Senior couple at the lake having a picnic
Dividend Stocks

3 Under-$30 Stocks That Pay Over a 5% Dividend Yield

These three dividend stocks below $30 could boost your passive income.

Read more »

grow money, wealth build
Dividend Stocks

2 Small-Cap Growth Stocks Worth Adding to Your Arsenal

While large-cap, blue-chip stocks make for the safest investments, there are plenty of small-cap growth stocks that offer safe and…

Read more »

A worker gives a business presentation.
Dividend Stocks

3 Blue-Chip Stocks to Hold Tight in a Fluctuating Market

These three Canadian blue-chip stocks can be good investments to hold in a volatile market to protect your self-directed investment…

Read more »

A close up image of Canadian $20 Dollar bills
Dividend Stocks

$25,000 in This Dividend Stock Pays You $1,920 a Year

Enbridge stock offers you a dividend yield of 7.7%, making it a top choice for income-seeking investors in 2023.

Read more »