3 TSX Dividend Stocks With Lucrative Yields in June 2023

Dividend stocks pay you for holding their shares. Aim to buy at a discount to maximize your income while preserving your capital.

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Who says you can’t get rich from dividend stocks? Here are three stocks that have big dividends for your consideration. Canadians should take a closer look if they are avid income investors. After all, these stocks pay eligible dividends that are taxed favourably for Canadian investors if shares are held in non-registered or taxable accounts. In other words, the dividend income from these stocks is taxed at lower rates than interest income, rental income, or your job’s income.

Enbridge stock

Energy infrastructure stocks are the energy stocks to explore if you have eyes set on income. Enbridge (TSX:ENB) is a mature, large-cap company in this industry that generates substantial cash flow every year. That cash stream has turned into a long streak of dividend growth. Specifically, the energy stock has increased its dividend for 27 consecutive years. Its recent dividend growth rate has slowed to about 3%, which is one factor contributing to its high yield.

The stock has traded at the low end of its sideways trading range since early 2022. The midpoint of the range is about $51. At $50.26 per share at writing, the blue-chip stock trades at a discount of 14% according to the 12-month analyst consensus price target, which also suggests near-term upside potential of 16%. ENB’s dividend yield of just north of 7% is mesmerizing and hard to beat for a Canadian Dividend Aristocrat.

BNS stock

Bank of Nova Scotia (TSX:BNS) stock is the highest-yielding big Canadian bank stock, which suggests it is the riskiest of the bunch. Investors are compensated well to wait for the macro headwind to blow over. At $66.71 per share, it offers a lucrative dividend yield of north of 6.3%.

The bank’s greater international exposure versus its peers makes it a riskier investment in a global environment of generally higher interest rates, higher inflation, and a greater probability for recessions to occur.

From its normal levels, the undervalued stock trades at a discount of more than 20%. Under normalization of the macro environment and its earnings, the bank stock can deliver total returns of at least 12% per year over the next three to five years while paying outsized dividends.

BCE stock

Other than Enbridge and BNS stock, BCE (TSX:BCE) is another popular TSX stock for lucrative yields. The big Canadian telecom yields 6.3% at $61.38 per share. It has a track record of paying increasing dividends for 14 consecutive years. BCE’s dividend has increased like clockwork by approximately 5% every year for the last decade.

With substantial cash flow generation and an expected reduction in its capital investments, it should be able to continue increasing its dividend with higher free cash flow over the next few years. At its current price, the blue chip stock appears to be fairly valued. So, it has the potential to deliver total returns of roughly 9-11% per year over the next three to five years.

Investor takeaway

These three names provide a small basket of diversification for your portfolio, as they’re from different sectors. However, you’ll notice that Bank of Nova Scotia appears to be the best bargain today, but it is also expected to experience greater risk and volatility in the short term. Income investors who can stomach the risk might consider taking a larger position in BNS with a view to growing long-term capital.

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 Kay Ng has positions in Bank Of Nova Scotia. The Motley Fool recommends Bank of Nova Scotia and Enbridge. The Motley Fool has a disclosure policy.

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