With the Federal Reserve continuing its rate hikes to tame inflation, I expect equity markets to remain volatile in the near term. Given the uncertain outlook, investors could invest in high-yielding dividend stocks to earn a stable passive income, irrespective of the market movement. Here are my three top picks that generate stable cash flows and pay dividends at a healthier rate.
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TC Energy
TC Energy (TSX:TRP) transports oil and natural gas across North America through its pipeline network. Besides, it operates several power-generating and storage facilities. Supported by its long-term take-or-pay contracts and rate-regulated assets, the company generates stable cash flows, allowing it to raise its dividends uninterruptedly since 2000. Meanwhile, the company currently offers a quarterly dividend of $0.93/share, with its yield currently at 6.61%.
Further, TC Energy is progressing with its $34 billion capital expenditure program, with around $1.4 billion of projects put into service in the March-ending quarter. Besides, the company added that it is on track to put around $6 billion worth of projects into service this year. Along with these investments, growing energy demand and European exports could boost the company’s financials in the coming years, thus making its quarterly payouts safer. Besides, the company’s management also hopes to increase its dividends by 3%-5% annually over the next few years, making TC Energy an attractive buy for income-seeking investors.
NorthWest Healthcare Properties REIT
NorthWest Healthcare Properties REIT (TSX:NWH.UN) would be another excellent dividend stock to boost your passive income. It owns and operates highly defensive healthcare properties, thus enjoying a high occupancy rate irrespective of the state of the economy. Besides, its long-term lease agreements, government-backed tenants, and inflation-indexed rent stabilize its financials.
Facing rising interest rates, NorthWest Healthcare is working on lowering its debt levels. It has identified around $220 million worth of non-core assets in its portfolio, which it plans to sell. The REIT also plans to lower its holding in United States and United Kingdom joint ventures. Overall, these initiatives could generate cash proceeds of $425-$500 million, which the company plans to utilize to clear out its high-interest-bearing debt. Further, with available fee-bearing capital of $4.5 billion as of March 31, the company is well-positioned to fund its growth opportunities.
Meanwhile, NorthWest Healthcare is paying a monthly dividend of $0.0667/share. Amid the recent sell-off due to rising interest rates, its forward yield has increased to 10.2%, making it an attractive buy.
TransAlta Renewables
With an impressive dividend yield of 7.67%, TransAlta Renewables (TSX:RNW) would be another prime stock to boost your passive income. The company owns and operates 48 diverse power-producing facilities, with a total capacity of 3 gigawatts. The green energy producer sells a substantial percentage of the power produced from these facilities through long-term contracts. So, its financials are less susceptible to volume and price fluctuations.
Notably, TransAlta Renewables expects to bring back its Kent Hills facilities into service this year. It has also signed a contract extension for its Kent Hills and Sarnia cogeneration facilities. Additionally, the company is constructing the Northern Goldfields facility and expanding its Mount Keith 132-kilo-volt facility in Australia. The company has several other projects in the advanced and early stages of development, which could drive its growth in the coming years. Considering all these factors, I believe TransAlta Renewables would be an ideal buy to boost your passive income.
