3 Ultra High Yield Stocks I’d Buy in 2023

Here’s why I would invest in high yield Enbridge stock and a few others.

| More on:
Increasing yield

Image source: Getty Images

When it comes to dividend stocks, I generally prefer growth over yield. The reason is simple:

A stock with strong dividend growth may have a higher yield tomorrow; a stock with an extremely high yield could see its dividend cut in the future.

A very long track record of dividend growth indicates financial stability, because a company can’t just borrow its way to 20 years of rising dividends. If one tried to do that, it would run out of money soon enough. So, rising dividends tend to correlate with financial health.

That’s not to say that high yield stocks can’t be good, though. To the contrary, many of them deliver solid total returns. If you look at stocks that have high yield, growth, and financial soundness, you often find top performers. In this article, I’ll explore three high-yield dividend stocks I’d consider buying in 2023.


Enbridge Inc (TSX:ENB) is a Canadian pipeline stock with a 6.4% yield. Its business model involves shipping crude oil to the United States, and supplying natural gas to Ontario. Both businesses are massive: ENB has the largest pipeline network in North America, and supplies 75% of Ontario’s natural gas.

How safe is Enbridge’s dividend?

Currently, the payout ratio (dividends divided by earnings) is over 100%. That in itself tends to suggest that the dividend is perhaps a little risky. However, if we substitute distributable cash flows (cash available to be paid as dividends) for earnings, then we get just a 70% payout ratio. That’s fairly healthy, and actually below average for a pipeline stock. Over the last five years, ENB has grown its dividend by 9.7% per year, so this is a dividend growth stock and a high-yield stock all rolled into one.

Pembina Pipeline

Pembina Pipeline (TSX:PPL) is another pipeline stock, this one with a 5.4% yield. Pembina’s dividend growth rate is not as high as Enbridge’s, but it has certain other advantages.

First, as a smaller company, it has more room to grow.

Second, Pembina has investments in marketing and storage, which give it some operational diversification.

Third, Pembina grew faster than Enbridge did last quarter, with a 29% year-over-year increase in revenue.

On the whole, I’m more enthusiastic about Enbridge stock than PPL. Its dividend growth is better, and it’s a much more entrenched company. However, Pembina is smaller and therefore could grow more in a best-case scenario. Perhaps it’s ideal to have a little exposure to both.

First National

First National Financial (TSX:FN) is a Canadian mortgage lender. It’s not a bank, it doesn’t take deposits, rather it partners with mortgage brokers to find people who are shopping for the best rates, and sells mortgages to them. This is a pretty simple business model for a financial company, but it has worked well for FN, which saw its revenue increase 11% last quarter. First National faces some risks from a cooling housing market, but on the other hand, it’s collecting increasing amounts of interest on mortgage loans that were issued in the past. With a business model that benefits from high interest rates and a 6.3% dividend yield, it’s definitely one to take a serious look at.

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 Andrew Button has no position in any of the stocks mentioned. The Motley Fool recommends Enbridge and Pembina Pipeline. The Motley Fool has a disclosure policy.

More on Dividend Stocks

Dividend Stocks

3 Canadian REITs That Pay Out Every Month

$10 can buy you a stake in a REIT that pays monthly distributions yielding 8.2% annually. CT REIT and another…

Read more »

A meter measures energy use.
Dividend Stocks

3 Reasons to Buy Utility Stocks in 2023

Here's why adding utility stocks to your portfolio is a smart idea, as we face significant uncertainty in 2023.

Read more »

Modern buildings in business district
Dividend Stocks

2 Top Residential REITs to Buy in February 2023

These two top residential REITs to buy offer attractive passive income as well as long-term growth potential.

Read more »

Simple life style relaxation with Asian working business woman healthy lifestyle take it easy resting in comfort hotel or home living room having free time with peace of mind and self health balance
Dividend Stocks

TFSA Investors: Make $102/Month Without Lifting a Finger

Here’s an amazing monthly Canadian dividend stock that can help TFSA investors earn reliable passive income for years.

Read more »

Dividend Stocks

TFSA Passive Income: Earn $129/Month Tax Free

Do you seek passive income? Leverage your TFSA to earn tax-free passive income via these Dividend Aristocrats.

Read more »

Silver coins fall into a piggy bank.
Dividend Stocks

How to Invest $23,000 in 2023 to Create Passive Income

Here's how income-generating cash cows such as Canadian Utilities and TC Energy can help you earn over $1,000 in annual…

Read more »

Early retirement handwritten in a note
Dividend Stocks

2 High-Dividend Stocks to Buy Today for Early Retirement

You can buy these two high-dividend Canadian stocks right now to help you plan an early retirement from work.

Read more »

worry concern
Dividend Stocks

Worried About Market Downturn? Buy This High-Yielding (6.3%) Dividend Stock

The stock market has been pretty volatile lately. It’s better to have a balanced portfolio that can perform in every…

Read more »