How Sustainable Are the High Yields of These 3 Stocks?

Consider investing in these three TSX dividend stocks to secure high-yielding dividend income for your self-directed portfolio.

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In times of market volatility, most stock market investors are wary of allocating money to the market. However, those who know how to choose wisely can make the most of almost any market environment. Investing in dividend-paying stocks is an excellent way to continue getting returns on your investment regardless of share price movement.

When overall valuations are down, dividend yields become inflated. Typically, high-yielding dividend stocks come with the risk of having unsustainable payouts. However, well-capitalized companies with stable business models can sustain high-yielding payouts in harsh economic environments.

Today, I will focus on high-yielding dividend stocks that you can consider adding to your portfolio to earn a stable, passive income.

Cardinal Energy

Cardinal Energy (TSX:CJ) is a $1.09 billion market capitalization Canadian energy company headquartered in Calgary. Primarily focused on oil, its principal business activity involves acquisitions, exploration, and the production of petroleum and natural gas in Alberta and Saskatchewan.

As of this writing, Cardinal Energy stock trades for $6.84 per share and boasts a 10.53% annualized dividend yield that it pays at a monthly schedule.

2022 saw its operational cash flow surge by 170% and its adjusted funds flow by 174% year over year. The performance saw the company reduce its debt load by 65%. This year, the company’s focus is to improve sustainability and reduce business risk. While it offers a premium dividend yield, its dividend profile is risky. Should oil prices remain favourable, it can deliver strong shareholder value in the long run.

Timbercreek Financial

Timbercreek Financial (TSX:TF) is a $642.55 million market capitalization non-commercial real estate lender. The company offers shorter-duration and customized financing solutions to professional real estate investors. By lending primarily against income-producing real estate assets, the company preserves investor capital and mitigates concentration risk by diversifying its portfolio geographically.

As of this writing, Timbercreek Financial stock trades for $7.67 per share. It boasts a massive 9% dividend yield that it pays out on a monthly schedule. The company achieved a record quarterly net investment income of $31.3 million in the fourth quarter for fiscal 2022.

Its reported income from operations increased from $60.8 million in fiscal 2021 to $88.1 million in fiscal 2022. While the rate-tightening environment might impact most other sectors negatively, it can improve profit margins for Timbercreek Financial stock and help it sustain its high-yielding monthly payouts.

TransAlta Renewables

TransAlta Renewables (TSX:RNW) is a Calgary-based $3.27 billion market capitalization electric utility company. The company owns and operates energy generation and transmission facilities focusing on green energy. It has an internationally diversified portfolio of renewable energy assets alongside natural gas power-generation facilities and other infrastructure assets in Canada.

As of this writing, TransAlta Renewables stock trades for $12.27 per share, boasting a 7.66% annualized dividend yield. While the dividend yield is high, it may have the financials to sustain its payouts.

Its fourth quarter of fiscal 2022 saw TransAlta Renewables report $154 million in total revenues, up from $138 million in the same quarter in fiscal 2021. It can be a good investment to consider for its monthly dividends.

Foolish takeaway

The factors impacting broader markets do not necessarily have a negative impact on every stock. It is possible to find stocks capable of delivering returns even through the harshest of market environments.

To this end, dividend stocks like Timbercreek Financial, TransAlta Renewables, and Cardinal Energy can be good investments to consider. However, it is essential to remember that even the safest dividend stocks may slash, suspend, or stop dividend payouts altogether. That said, these three TSX dividend stocks seem like safe investments.

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 Adam Othman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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