How well-diversified is your portfolio? To enjoy long-term success as a stock market investor, diversifying between growth- and income-focused stocks is essential. When it comes to investing in a recessionary environment, it is better to focus on solidifying the income-focused segment of your self-directed portfolio.
As of this writing, the S&P/TSX Composite Index is up by 5.6% from its March 2023 low. However, there is no way to determine whether the market will maintain an upward trajectory. It is likelier that the stock market will remain volatile.
If you are worried about a recession, investing in income-generating assets can be a good way to keep generating returns on your investment. Here is a look at two dividend-paying stocks you can consider adding to your self-directed portfolio to earn a passive income.
Enbridge
Enbridge Inc. (TSX:ENB) is a $108.1 billion market capitalization multinational pipeline and energy company. Headquartered in Calgary, Enbridge is one of the top Canadian energy stocks. Boasting one of the most extensive energy pipeline networks in North America, Enbridge is responsible for transporting a fifth of all the natural gas used in the US. It also transports a third of all the crude oil in the region.
Enbridge doesn’t produce oil. Rather, it generates revenue by charging energy producers using its network, giving Enbridge a cushion against volatile commodity prices.
This aspect gives Enbridge more of a defensive appeal than its energy sector peers. The diversifying energy company is also investing in a growing renewable energy segment to align with the need for a greener future. ENB stock offers dividends on a quarterly schedule and has grown its shareholder dividends for almost three decades.
As of this writing, Enbridge stock trades for $53.37 per share and boasts a juicy 6.65% dividend yield.
BCE
BCE Inc. (TSX:BCE) is the top Canadian telecom company. The $57.7 billion market capitalization stock can be an astute option for a long-term dividend-paying investment. Telecom businesses can thrive in virtually any economic period due to the essential nature of their services.
Being the top telecom company in the country, BCE stock is well-positioned to be a staple in many investor portfolios due to its stability and reliability.
The defensive appeal for telecoms has only increased since the pandemic began. As more and more people were forced to work from home, telecoms like BCE have become critical in ensuring remote capacity for their customers. If you factor in its role as the leading 5G provider in the country, is also has strong long-term growth potential.
BCE stock trades for $63.24 per share at writing, boasts a 6.12% dividend yield, and has increased its payouts each year for over two decades.
Foolish takeaway
Investing in high-quality dividend stocks does not mean your portfolio’s value will not decline in a recession. Share prices are likely to drop with the broader market. However, top-notch dividend stocks can continue providing you with returns on your investment via regular quarterly distributions.
For this, you must identify and invest in stocks with financially healthy underlying businesses capable of supporting dividend payouts in a recessionary environment. To this end, Enbridge stock and BCE stock can be solid income-generating assets to consider.
