BCE (TSX:BCE) stock is a magnificent high-yield dividend stock that can help investors fuel their passive income streams. Of late, the stock has been on the retreat alongside the rest of the telecom scene. Undoubtedly, as shares go down, the yield swells a bit. With the stock looking to flirt with 52-week lows again, investors who weren’t able to load up last time may have another shot to do so.
At writing, BCE stock sports a commanding 6.61% dividend yield. It’s a safe yield that’s still well-covered by cash flows. And though a recession may still be in the works up here in Canada, I’m not so sure how much the actual economic downturn will weigh on results now that expectations and investor confidence are at a low point.
For now, I view BCE stock as a great buy if the dividend yield tempts you. However, I do think there are even better opportunities in the high-yield universe. And in this piece, we’ll have a look at one other often-neglected high-yield dividend stock that may offer even better value for money.
Consider shares of midstream energy company Enbridge (TSX:ENB), which is also feeling the negative pressure these days, even as the broader market averages continue their ascent from the depths of late last year.
Enbridge stock
Shares of ENB are down around 18% from their 2022 highs, just shy of $59 per share. The dividend yield is now sitting at a massive 7.4% at the time of writing. Though it’s been a painful year-long correction for the pipeline titan, I still think income investors have plenty of reason to step in as shares continue to sag. As the shares fall in price, the dividend yield stands to swell even further.
Undoubtedly, chasing the stock in “falling knife” mode can be a risky move. As the yield swells, you may be inclined to “chase” yield. Neither situation is ideal for long-term investors seeking to build wealth over time. When it comes to Enbridge, though, I do think the juicy dividend is backed by an incredibly strong cash cow of a business.
The company has a very long history of hiking its dividend. Indeed, the dividend-growth rockstar has an impressive 28 years of consecutive dividend increases and counting. The most impressive part is the company has raised its dividend through even uglier times than the one we’re in currently. Enbridge’s managers have seen brutal industry and macro environments. But they’ve found a way to keep rewarding investors for their patience. That’s respectable.
Of course, there’s always a chance that the impressive streak could end if the perfect storm strikes. At this juncture, I just don’t see that happening. For now, my bet is that Enbridge will break the three-decade mark (almost there!) when it comes to dividend hikes.
If you seek income, I don’t think you can go wrong with the company, even if regulatory decisions pave the way for excessive levels of volatility. Even in the face of headwinds, I think Enbridge can keep its dividend growth going at a low-to-mid single-digit rate for the foreseeable future.
Though there may be few (if any) near-term catalysts that could reverse the stock’s freefall, I’d not be afraid to buy the dip while shares go for 1.9 times price-to-sales and 14.5 times price-to-cash flow. That’s way too cheap for a company with such a rich history of lining shareholders’ pockets with dividends!
Bottom line
If you love dividends, BCE and Enbridge are both great options. Personally, I like Enbridge for the extra yield and upside potential. Though, I don’t think you can go wrong with nibbling at each on the way down!
