3 High-Yielding Dividend Stocks That Let You Sleep at Night

If you are looking for stocks that pay sustainable dividends that could let you rest easy at night, here are three to consider owning right now.

| More on:
money while you sleep

Image source: Getty Images

Generally, Canadian stocks with an overtly high dividend yield are ones you should avoid. An elevated dividend yield over 8% is usually a big, red flag. The market is pushing the stock down and the yield up, mainly because it does not believe the dividend is safe or sustainable.

I would exercise caution on some high-yielding stocks right now, including Corus Entertainment, Algonquin Power, and Chartwell Retirement Residences REIT. These are not stocks I would consider for a sleep-well-at-night portfolio, at least not at the present.

If you are looking for stocks that pay sustainable dividends that could let you rest easy at night, here are three to consider owning right now.

A high-yielding real estate stock

Dream Industrial Real Estate Investment Trust (TSX:DIR.UN) earns investors a 5.77% dividend yield at today’s price of $12 per share. Even though Dream Industrial’s stock is down 29% this year, it has delivered solid results in 2022.

For the first nine months of 2022, funds from operation (FFO) per unit (its core metric of cash flow) has grown 10% to $0.66. The real estate investment trust (REIT) has been enjoying high 99% occupancy. Rental rates have been soaring, especially in top cities (like Toronto and Montreal) where Dream has a large presence.

Dream just entered a joint-venture agreement to acquire Summit Industrial REIT, a premium industrial REIT in Canada. Along with a strong development pipeline, this should provide a nice boost to cash flows in 2023.

Dream has a good balance sheet. Its distribution payout ratio sits at 79%, which means its monthly distributions are well covered. For an undervalued REIT with a relatively safe distribution, Dream is a good bet today.

A blue-chip stock for big dividends

BCE (TSX:BCE) is not an overly exciting blue-chip stock, but if it is income you are looking for it is a relatively safe bet. BCE stock earns a 5.8% dividend yield at the current price of $45.90 per share.

It is Canada’s largest telecommunications business. Cellular and internet service is a very resilient, sticky business. This helps BCE earn steady earnings over longer periods. Last quarter, revenues rose 3.2% to $6 billion, and adjusted net earnings per share rose 7.3% to $0.88.

With a net debt leverage ratio of 3.2 times, BCE does have a lot of debt. However, 85% of that debt is fixed, and it has a weighted average term to maturity of 14 years. Overall, BCE has a pretty safe, steady-as-it-goes business model that should help preserve its dividend for many years ahead.

An energy infrastructure stock with a high dividend

Pembina Pipeline (TSX:PPL) is another stock to consider for reliable dividend income. At $46 per share, it pays a 5.5% dividend yield. Pembina operates a portfolio of energy infrastructure assets that service the Western Canadian energy sector. It provides crucial transportation and processing solutions to energy producers.

This company is resilient. Its dividend largely being covered by contracted earnings. Even when oil prices collapsed in 2020, Pembina continued to maintain its dividend to shareholders. Right now, it has a dividend-payout ratio of 54%.

The company has benefited from strong energy prices this year. It could see another solid year, as it works to maximize the utilization of its assets. Pembina has a solid balance sheet and the potential to grow with some future large-scale projects in carbon sequestration and liquified natural gas (LNG) exports.

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 Robin Brown has positions in Dream Industrial Real Estate Investment Trust. The Motley Fool recommends Dream Industrial Real Estate Investment Trust, Pembina Pipeline, and Summit Industrial Income REIT. The Motley Fool has a disclosure policy.

More on Dividend Stocks

Dial moving from 4G to 5G
Dividend Stocks

Down by 15%: Is BCE Stock a Good Investment in January 2023?

Few companies are truly “too big to fail,” but most market leaders are far more resilient against market headwinds or…

Read more »

edit Business accounting concept, Business man using calculator with computer laptop, budget and loan paper in office.
Dividend Stocks

Looking for $200/Month in Alternative Income? Buy 530 Shares of This Stock

Do you want to earn $200 monthly alternative income for the next few years? Then accelerate your investments in this…

Read more »

IMAGE OF A NOTEBOOK WITH TFSA WRITTEN ON IT
Dividend Stocks

Deadline Coming: 3 TFSA Stocks to Buy Now Before Dividend Payouts

Invest in RNW stock and 2 other TFSA friendly names before this fast-approaching deadline to get the full 2023 dividend.

Read more »

Various Canadian dollars in gray pants pocket
Dividend Stocks

Passive Income: How to Earn Nearly $367 Per Month in Your TFSA Portfolio

Top TSX dividend stocks now trade at discounted prices for TFSA investors seeking passive income.

Read more »

Hand arranging wood block stacking as step stair with arrow up.
Dividend Stocks

3 Stocks I’d Buy — But I’m Waiting for a Dip

After the recent bounce, It may be smart for investors to wait for a dip before they buy these solid…

Read more »

TFSA and coins
Dividend Stocks

5 Stocks to Buy for $5000/Year in Tax-Free Passive Income

TSX dividend stocks such as Enbridge and TD Bank can help you earn tax-free income via dividends and capital gains…

Read more »

woman data analyze
Dividend Stocks

Passive Income: How to Generate an Average of $385 Per Month in a TFSA

Top TSX dividends stocks now trade at discounted prices for TFSA investors seeking passive income.

Read more »

edit Colleagues chat over ketchup chips
Dividend Stocks

How to Earn $5,350/Year in Passive Income — TAX FREE!

Canadian investors could earn over $5,000/year in tax-free passive income by targeting stocks like First National Financial Corp. (TSX:FN) and…

Read more »