3 Dividend Powerhouses to Buy for Reliable Passive Income

Any investor can find it useful to own dividend powerhouses like these stocks for reliable and growing passive income!

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Here are three dividend stocks that are powerhouses for investors to buy for reliable passive income.

CIBC stock

The big Canadian bank stocks are solid dividend payers. Particularly, Canadian Imperial Bank of Commerce (TSX:CM) has paid common stock dividends and never missed a payment since 1868. So, this year is its 155th consecutive year of dividend payments.

Since its inception, CIBC has grown to a scale that allows it to make north of $6 billion in net income in a normal year. In most years, it also maintains a healthy payout ratio of 40-50% of earnings. Furthermore, it has a coffer of retained earnings. In the last quarter, it reported $28.4 billion, which could cover about nine years of dividend payments were its dividend payments to remain constant.

In recessionary periods, the banks payout ratio will likely be higher than normal, and the regulator might restrict the bank and its peers from raising their common stock dividends. However, those are not times to be alarmed. Instead, they could be excellent times to accumulate shares on sale.

At $57.14 per share at writing, CIBC stock offers a deliciously juicy dividend yield of just under 6%. Analysts believe it’s undervalued by about 12% versus the 12-month consensus price target of $65.07.

TELUS stock

As one of the Big Three Telecoms in Canada, other than being a reliable provider of wireless services, TELUS (TSX:T) also offers internet, television, and landline phone services in part of Canada. It’s also involved with new areas of growth via TELUS International, which provides end-to-end IT service solutions, from idea generation to user experience or user interface design to the final delivery of the solution. It also has TELUS Health, which provides health technology services, and offers digital solutions and data insights for agriculture and consumer goods businesses.

For example, TELUS Health just launched virtual veterinary care for cats and dogs in Ontario through its MyPet platform. From the press release: “According to a 2021 Ontario Veterinary Medical Association (OVMA) survey of pet owners, nearly 75% of telemedicine appointments can be treated solely through virtual care, without a trip to the clinic.”

TELUS is a Canadian Dividend Aristocrat. Through 2025, it aims to increase its dividend by 7-10% annually. At $27.55 per share at writing, TELUS stock offers a nice dividend yield of 5.1%. Analysts believe it’s discounted by about 12% versus the 12-month consensus price target of $31.47.

Brookfield Infrastructure stock

Like CIBC and TELUS, Brookfield Infrastructure Partners (TSX:BIP.UN) is a reliable source for investors to generate passive income. It has been increasing its cash distribution for about 15 consecutive years. For reference, its five-year dividend-growth rate is 6.6%. Going forward, it has the ability to increase its cash distribution by 5-9% per year.

BIP is one of the largest owners and operators of essential global infrastructure networks. It owns high-quality utilities, midstream, transport and data infrastructure assets. Its portfolio generates sustainable cash flows with high margins. It also recycles capital strategically. For example, it will acquire and optimize infrastructure assets and potentially sell them when they mature.

At US$33.48 per unit at writing, BIP stock offers a decent yield of 4.6%. Analysts believe it’s discounted by about 21% versus the 12-month consensus price target of $42.23.

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 Kay Ng has positions in Brookfield Infrastructure Partners and TELUS. The Motley Fool recommends Brookfield Infrastructure Partners, TELUS, and Telus International. The Motley Fool has a disclosure policy.

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