Stock market downturns can create a great opportunity for income-seeking investors. Falling share prices can result in significant losses for investors whose investments decline in valuation. However, falling share prices tend to inflate dividend yields. Almost the entire market has been in the red this year.
As of this writing, the S&P/TSX Composite Index is down by 5.30% year to date and 9.46% from its 52-week high. The Canadian benchmark index’s downturn aligns with the fact that most Canadian stocks are trading for lower valuations this year. Finding and investing in the right dividend stocks can let you lock in high-yielding returns and set yourself up for significant long-term wealth growth.
If you have a long investment horizon and the discipline to buy and hold assets for the long term, here are two high-yielding dividend stocks that can become a part of your self-directed portfolio today.
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Enbridge
Enbridge (TSX:ENB) is a $112.32 billion market capitalization Canadian multinational pipeline company headquartered in Calgary. The company owns and operates an extensive energy transportation portfolio responsible for transporting a large chunk of all energy products consumed in North America.
Enbridge stock is a Canadian Dividend Aristocrat that introduced dividend hikes even when most other energy stocks worldwide suspended or slashed payouts to investors.
The company is well capitalized and well positioned to deliver stellar long-term returns to its shareholders. Enbridge has a low-risk model, where 90% of its debt is at a fixed rate, and 98% of its cash flows come through long-term, contracted assets. Since it doesn’t produce oil and gas itself, Enbridge stock enjoys some immunity to the impact of changing commodity prices.
As of this writing, Enbridge stock trades for $55.47 per share. It boasts a juicy 6.20% dividend yield that you can lock in by investing at current levels.
Algonquin Power & Utilities
Algonquin Power & Utilities (TSX:AQN) is an $8.31 billion market capitalization Canadian utility and renewable energy conglomerate. Utility businesses are typically the pinnacle of stability in unstable markets. However, high inflation and rising interest rates have impacted Canadian utilities this year.
Utility businesses have high debt loads due to their business models. The interest rate hikes by central banks to cool down inflation have put Algonquin stock and its peers under pressure.
As of this writing, Algonquin Power & Utilities stock trades for $12.34 per share and boasts a juicy 7.77% dividend yield. The stock recently released its third-quarter earnings report for this fiscal year. The earnings report disappointed investors, as the company missed its earnings estimates.
After surpassing consensus revenue estimates for three consecutive quarters, its quarterly earnings were $0.11 per share, down by 31.25% from the consensus estimate of $0.16 per share.
Its short-term troubles have caused its share prices to go down right now. However, it can be an excellent long-term addition to your portfolio, considering its low-risk business model and growth potential through its renewable energy arm. It can be a steal at current levels.
Foolish takeaway
Buying and holding high-quality dividend stocks is an excellent way to line your account balance with some more cash through shareholder dividends. You can use the dividend income as additional spending money. Alternatively, you can consider reinvesting the payouts to purchase more shares of the dividend stocks. It can accelerate your long-term wealth growth through the power of compounding.
Regardless of your approach, Enbridge stock and Algonquin Power stock are two income-generating assets too attractively priced to ignore right now.
