With equity markets continuing to be under pressure amid monetary tightening measures and an inflationary environment, investors could look to strengthen their portfolios with high-yielding dividend stocks. Due to their stable cash flows and regular payouts, these stocks are less susceptible to market fluctuations and pay steady cash flows. Meanwhile, here are my three top dividend picks, with yields of over 6%.
NorthWest Healthcare Properties REIT
NorthWest Healthcare Properties REIT (TSX:NWH.UN) would be an ideal stock to consider in this volatile environment due to its defensive healthcare portfolio. The REIT (real estate investment trust), which acquires and manages healthcare properties, deliveries stable performance, even during the challenging environment. Its long-term agreements, with a weighted average lease expiry of 14.1 years, and government-backed tenants increase its occupancy rate (currently at 97%). A substantial part of its rent is inflation-indexed, thus protecting its financials in this inflationary environment.
Meanwhile, NorthWest Healthcare is expanding its portfolio by acquiring assets in high-growth markets, such as the United States, the United Kingdom, and Australia. The expansion could boost its cash flows in the coming years. So, I believe the company’s dividend is safe. However, amid the recent selloff, the company has lost close to 20% of its stock value compared to its last month’s highs. The steep correction has dragged its valuation down, with the company trading at 6.2 times its earnings for the next four quarters. Its dividend yield stands at an attractive 7.58%.
Enbridge
Over the last few months, oil prices have cooled down substantially amid recession fears. Although oil prices don’t have much impact on its financials, Enbridge (TSX: ENB)(NYSE: ENB) has lost over 10% of its stock value compared to its last month’s highs. Amid the pullback, the company trades 17 times its earnings for the next four quarters, while its dividend yield stands at an attractive 6.5%.
The midstream oil company operates over 40 revenue-generating assets, with 98% of its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) underpinned by regulated assets or long-term contracts. So, it generates stable and predictable financials. Over the last 10 years, the company has grown its adjusted EBITDA at an annualized rate of 14%, thus allowing it to raise its dividend at a CAGR (compound annual growth rate) of 13%.
Enbridge could benefit from the growing export of liquefied natural gas from North America to Europe amid the ongoing geopolitical tensions. Also, the company is progressing with its $13 billion secured capital program, with already $3 billion spent in the first six months of this year. So, I believe Enbridge is well positioned to maintain its dividend growth.
Pizza Pizza Royalty
With a healthy dividend yield of 6.43% and an attractive NTM (next 12-month) price-to-earnings multiple of 14.1, Pizza Pizza Royalty (TSX: PZA) is my final pick. The easing of restrictions has allowed the company to reopen its dining spaces and non-traditional restaurants, thus driving foot traffic. In the recently reported second quarter, its same-store sales grew by 20.3%, thus driving its royalty pool sales higher by 20.8%. Amid its sales growth, the company’s adjusted EPS (earnings per share) also grew by 19.5%.
Meanwhile, Pizza Pizza Royalty’s growth could continue, as it focuses on menu innovation, creative marketing, and opening new restaurants. Also, its solid digital and delivery channels could continue to boost its financials in the coming quarters. With its highly franchised business model, the company delivers stable and predictable cash flows, as franchises pay a royalty based on sales, not profits.
Meanwhile, Pizza Pizza Royalty has raised its dividend twice this year, thanks to its solid financials. Its dividend yield is currently at 6.4%.
