3 High-Dividend Stocks to Buy Today for Early Retirement

Here’s why dividend stocks such as Enbridge can help you generate a stable stream of recurring income in the next decade.

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Investing in high-dividend stocks can help you create an additional income stream, thereby accelerating your retirement plans. You can begin investing in quality dividend stocks with a small amount of capital and derive game-changing returns over time.

Typically, the best dividend-paying stocks generate cash flows across business cycles and increase earnings as well as dividend payouts over time. Additionally, long-term investors will also benefit from capital gains. Here are three such high-dividend stocks you can buy today for early retirement.

Enbridge stock

Among the most popular dividend stocks on the TSX, Enbridge (TSX:ENB) currently offers investors a forward yield of 6.6%.  Enbridge is an energy infrastructure behemoth with a sustainable payout ratio of less than 70%. Further, armed with an investment-grade and a well-capitalized balance sheet, Enbridge has enough room to keep increasing its dividends.

It continues to expand its base of cash-generating assets and ended 2022 with a capital project backlog of several billion dollars.

Recently, the French government selected a consortium, including Enbridge, to develop an offshore wind energy farm in Normandy. The project will have an installed capacity of one gigawatt and generate enough power for 1.5 million residents.

Enbridge is focused on gaining traction in the renewable energy space, which currently accounts for just 3% of its adjusted EBITDA (earnings before interest, tax, deprecation, and amortization).

Due to its diversified cash flows, Enbridge has increased its dividends for 28 consecutive years.

RioCan REIT stock

A real estate investment trust, or REIT, RioCan (TSX:REI.UN) offers investors a dividend yield of 5%. One of Canada’s largest commercial landlords, RioCan owns, develops, and manages retail-focused, mixed-use properties primarily in high-density, transit-oriented regions.

RioCan pays investors a monthly dividend but had to reduce these payouts amid the pandemic. Its funds from operations per unit were up 7% at $1.71, as net operating income from same-store sales was up 4.3%.

The REIT ended 2022 with a payout ratio of 55%, providing it with enough room to increase dividends once interest rates normalize. Given consensus price target estimates, RioCan stock is trading at a discount of 17.4%.

Brookfield Renewable Partners stock

The final high-dividend stock on my list is Brookfield Renewable Partners (TSX:BEP.UN) which yields 4.4%. One of the largest clean energy companies in the world, Brookfield Renewable has increased its dividend by 6% annually in the last 22 years.

The worldwide shift towards renewables will act as a major tailwind for BEP, allowing the company to increase cash flows at a robust pace in the next two decades. A report from the International Energy Agency projects renewable energy to account for more than 75% of energy capacity additions through 2050.

Brookfield Renewable’s hydro facilities generate 8,200 megawatts of power, while wind and solar facilities generate 6,900 megawatts and 4,300 megawatts of power. It has a combined capacity of 25.4 gigawatts and another 110 gigawatts under development.

In the last 24 years, BEP stock has returned 16% annually, easily outpacing the broader markets. The company now aims to expand funds from operations by 10% annually and deliver returns between 12% and 15% annually to shareholders in the near term.

BEP stock is currently priced at a discount of 17% to consensus price target estimates.

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 Aditya Raghunath has positions in Brookfield Renewable Partners and Enbridge. The Motley Fool recommends Brookfield Renewable Partners and Enbridge. The Motley Fool has a disclosure policy.

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