Are you looking for safe dividends and stable long-term returns? Here are three solid buy-and-hold dividend stocks that can act as a part of your core holdings to help with portfolio stability. They have market or below-market beta, stable business performance, and provide secure dividends for stable returns through market cycles.
Royal Bank of Canada (TSX:RY) is Canada’s largest bank by market capitalization. As a designated Global Systematically Important Bank, its scale and business performance stability is unlike any other. It serves 17 million clients across Canada, the United States, and 27 other countries. RBC primarily generates revenue from Canada (60% of last 12-month, or LTM, revenue) and the U.S. (24%).
Other than having geographic focus in North America, the diversity of its business across personal and commercial banking (53% of LTM earnings), wealth management (21%), capital markets (21%), and 5% insurance also help contribute to overall stable business performance.
Yahoo Finance shows RBC stock’s recent beta is 0.73, which is below the market’s beta of one. At about $137 per share at writing, the Canadian bank stock is fairly priced for a dividend yield of almost 3.9%.
For reference, RBC stock’s 10-year returns are about 13.5% per year. In the period, it also increased its dividend by roughly 8.1% annually.
Sun Life stock
Like Royal Bank, Sun Life (TSX:SLF) is another darling dividend stock in the financial services space. The life and health insurance company has offices in 28 markets and serves 85 million international clients. Its fourth-quarter net income is diversified across 30% from its asset management segment, 32% from Canada, 23% from the U.S., and 15% from Asia.
SLF targets earnings per share growth of 8-10% per year. It was on target, achieving a growth rate of 9% in the past five years. In the period, its return on equity of 14.7% was also decent. Importantly, it maintains a healthy payout ratio for its secure dividend.
At $66.53 per share at writing, the TSX stock is fairly priced for a dividend yield of 4.3%. Yahoo Finance shows SLF stock’s recent beta as 0.97.
For reference, the stock’s 10-year returns are about 16.3% per year. In the period, it also increased its dividend by roughly 6.7% annually.
Brookfield Infrastructure Partners
Brookfield Infrastructure Partners (TSX:BIP.UN) is a solid utility with a long-term growth runway. It has a diversified portfolio of quality infrastructure assets. It has also demonstrated its ability to capture profits from selling optimized assets, while generating sustainable cash flows from its portfolio.
For example, last year, it achieved a 19% rate of return, or 3.2 times its original investment for the sale of U.S. container terminals. It also sold a Brazilian electricity transmission business for a 22% rate of return or 2.4 times the original investment.
The utility generates quality cash flow. About 90% of its cash flows are regulated or contracted and about 70% are indexed to inflation. Last year, its funds from operations per unit increased by 12% year over year.
At about $46 per unit at writing, investors can buy the undervalued stock for a cash-distribution yield of 4.6%. Yahoo Finance shows the stock’s recent beta as 0.88.
For reference, the stock’s 10-year returns are about 16.2% per year. In the period, it also increased its cash distribution by approximately 9.1% annually. Going forward, management targets to grow its cash distribution by 5-9% per year.
Investors should be able to sleep well at night with these core holdings in their portfolios. Right now, BIP appears to be the best value of the bunch!