Investing in dividend stocks can be a prudent strategy, as investors can benefit from both regular payouts and capital appreciation. Due to their regular payouts, these companies are less susceptible to market volatility and deliver consistent returns. Having seen the benefits of dividend stocks, here are three top deals you should take advantage of.
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Pizza Pizza Royalty
Pizza Pizza Royalty (TSX:PZA) operates a highly franchised restaurant business, collecting royalties from its franchisees based on their sales. So, rising prices and wage inflation do not impact the company’s financials. Meanwhile, menu price hikes to compensate for increasing expenses could boost its royalty pool income.
Further, the company could continue to benefit from restaurant expansion, a restaurant renovation program, and positive same-store sales growth. The company expects to increase its restaurant count by 3-4% this year. Besides, its new product launches, strong value messaging, and promotional activities could continue to drive its same-store sales growth in the coming quarters. So, I believe the company’s future payouts are safe.
Meanwhile, PZA has raised its monthly dividend seven times since April 2020 amid solid financials. It currently pays a monthly dividend of $0.075/share, translating its forward yield to 5.9%. The stock now trades at 16 times analysts’ projected earnings for the next four quarters, making it one of the top dividend stocks to have in your portfolio.
Enbridge
Another dividend stock worth adding to your dividend portfolio would be Enbridge (TSX:ENB). The midstream energy company operates a pipeline network transporting oil and natural gas across North America. With around 98% of its cash flows underpinned by cost-of-service contracts, the company generates stable and predictable financials. Besides, about 80% of adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) is inflation indexed, thus shielding against rising prices.
Meanwhile, Enbridge is expanding its asset base through its $17 billion secured capital program, with management expecting to put around $6.4 billion of projects into service by the end of next year. Supported by these investments, solid organic growth, and favourable rate revisions, the company’s management expects its adjusted EBITDA to grow at a CAGR (compound annual growth rate) of 4-6% through 2025 and around 5% after that. So, I believe the ENB stock’s dividend payouts are safe.
Enbridge now pays a quarterly dividend of $0.8875/share, with its forward yield at 7.15%. ENB trades at 2.1 times analysts projected sales for the next four quarters, making it an attractive buy.
BCE
With a forward dividend yield of 6.63% and an attractive NTM (next-12-months) price-to-earnings multiple of 18.3, BCE (TSX:BCE) would be an excellent addition to your dividend portfolio. Amid digitization and growing remote working and online shopping, the demand for telecommunication services is growing, expanding the addressable market for the company. Meanwhile, the company continues to make capital investments in expanding its 5G and broadband infrastructure to acquire more customers and boost its financials.
Besides, BCE’s recurring revenue streams stabilize its cash flows, thus allowing it to raise its dividends consistently. Supported by its solid cash flows, the company has increased its dividends by over 5% annually for the last 15 years. The telco’s financial position also looks healthy, with its liquidity at $3.7 billion as of March 31.
