Establishing a passive income stream is something that all investors want, and despite the perceived difficulty, is easier than most think. This is because the market provides plenty of high-yield dividend stocks to help establish and even grow a passive income stream.
Here’s a look at two high-yield dividend stocks to consider buying for your portfolio today.
Add this energy titan to your portfolio and enjoy a juicy 7% yield
Enbridge (TSX:ENB) is one of the largest energy infrastructure companies in North America. In addition to operating the largest and most complex pipeline system on the planet, Enbridge boasts a growing renewable energy business and one of the largest utilities on the continent.
Both the pipeline and renewable energy segments hold massive long-term appeal. The pipeline side of the business includes both crude and natural gas segments. In terms of volume, Enbridge transports nearly one-third of North American-produced crude and about one-fifth of the natural gas needs of the U.S. market.
In short, the segment is incredibly defensive and provides a stable revenue stream for the company, which isn’t based on the price of the commodity being hauled.
If the pipeline side of the business comprises defensive appeal, the renewable energy side is positioned for substantial long-term growth.
Over the past two decades, Enbridge has invested over $8 billion into renewables. Today that portfolio comprises over 40 facilities located across North America and Europe. Those facilities boast a net generating capacity of over 2,100 MW, which is enough to power over 960,000 homes.
That growth is expected to comprise a growing part of Enbridge’s revenue over the longer term.
Turning to income, Enbridge really shines as a high-yield dividend stock. As of the time of writing, Enbridge pays out a very attractive 7.44% yield. This means that a $30,000 position in Enbridge will generate an income of over $2,200.
And that’s not even the best part. Not only is Enbridge’s lucrative passive income appeal backed by that very defensive pipeline network, but it’s also growing. Enbridge has provided investors with consecutive annual increases to that dividend for 28 years.
In other words, this is one high-yield dividend stock to buy now and forget about for a decade or more.
Banking on growth and income for decades
Canada’s big banks are among some of the best long-term investments on the market. There’s a good reason for that view, too. The banks consistently offer a high-yield dividend and solid growth potential.
And Canadian Imperial Bank of Commerce (TSX:CM) is one of the big banks to consider adding to your portfolio.
CIBC has a smaller international footprint than its larger peers, which the bank compensates for with a larger domestic mortgage book. Given the interest rate hikes we’ve seen over the past year, that risk has led to the stock dropping over 10% in the trailing 12-month period.
That drop has also swelled CIBC’s dividend to an incredible 6.23%, making it one of the higher yields among its big bank peers.
So then, why should investors buy CIBC as a high-dividend stock right now? That comes down to several key points.
First, CIBC (and by extension the other stocks mentioned above) are long-term buys to establish a viable passive income stream. The fact that CIBC trades at a decent discount right now isn’t necessarily a reflection on the bank. Rising interest rates have impacted most of the market.
The fact that CIBC trades at a discount just makes that opportunity more attractive.
Second, it’s worth noting that Canada’s big banks historically fare much better than their U.S.-based peers during downturns. This only furthers the appeal of buying CIBC now while it still trades in discount territory.
Buy these high-yield dividend stocks today
Finding the right mix of high-yield dividend stocks to invest in today can make the difference between retiring with a comfortable passive income stream or needing to work several years longer.
Fortunately, both stocks mentioned above provide a great income that is growing and also offers some defensive appeal.
In my opinion, both high-yield dividend stocks mentioned above should be part of any well-diversified portfolio.
