The prolonged high interest rates, inflationary environment, and supply chain disruption amid the ongoing geopolitical tensions have made the equity market volatile. Given the uncertain outlook, it is prudent to have a secondary income. Meanwhile, investing in high-yielding dividend stocks would be one of the cost-effective ways to earn a secondary income. So, here are three high-yielding dividend stocks that you can buy at an attractive valuation to boost your passive income.
NorthWest Healthcare Properties REIT
Amid the rise in interest rates and a temporary increase in its debt levels, NorthWest Healthcare Properties REIT’s (TSX:NWH.UN) interest expenses rose, impacting its financials and stock price. It has lost over 40% of its stock value compared to its 52-week high, while its price-to-book multiple has declined to 0.8. The steep pullback has also raised its forward dividend yield to an attractive 10.46%.
Meanwhile, the company has taken several initiatives to strengthen its financial position. The company expects to generate $550-$600 million by selling non-core assets and lowering its stake in its United States and United Kingdom joint ventures. It plans to utilize the net proceeds to reduce its debt levels. The company enjoys a high occupancy rate due to its defensive healthcare portfolio, long-term lease agreements, and government-backed tenants. Also, with over 80% of its rent indexed to inflation, the company’s financials are protected from rising prices.
Notably, with a fee-bearing capital of around $4.6 billion, NorthWest Healthcare would progress with its new investment opportunities while remaining disciplined in its capital deployment. So, given its deleveraging initiatives and healthy investment opportunities, the company’s management projects its AFFO (adjusted funds from operations) to grow by 20%, thus making its future payout safer.
TransAlta Renewables
TransAlta Renewables (TSX: RNW) owns and operates a portfolio of diversified power-producing facilities with a total production capacity of three gigawatts. With the company selling the power produced from these facilities through long-term contracts, price, and demand fluctuations will have a minimum impact on their financials. The company’s management added that its growth initiatives are progressing well, despite supply chain issues.
The company expects to rehabilitate its 13 wind facilities at Kent Hills in the second half of this year. The company is also hopeful of beginning commercial operation of the Northern Goldfields facility and completing the expansion of its Mount Keith this quarter. These initiatives could boost TransAlta Renewables’s financials, thus allowing it to continue paying dividends at a healthier rate. Meanwhile, the company currently pays a monthly dividend of $0.07833/share, with its yield currently at 7.37%, thus making it an attractive buy.
Algonquin Power & Utilities
Algonquin Power & Utilities (TSX: AQN) is another stock that has witnessed a substantial selloff over the last few months, with the company losing around 38% of its stock value compared to its 52-week high. Given its capital-intensive business, the rising interest rates and higher debt levels have dragged its stock price down. However, it is focusing on strengthening its financial position by optimizing its asset base through asset sales, lowering its capital intensity, and slashing its quarterly dividend by around 40%.
With the termination of the acquisition of Kentucky Power Company and Kentucky Transmission Company, the company expect to make a capital investment of around $1 billion this year, with approximately $700 million on utility assets and $300 million on renewables. Also, its solid underlying regulated assets could continue to generate stable cash flows in the coming quarter.
Despite dividend cuts, the company currently offers an excellent dividend yield of 5.2% while trading at an attractive next-12-month price-to-earnings multiple of 13.5. Considering all these factors, I believe AQN would be an excellent buy for income-seeking investors, despite its dividend cuts.
