The global equity markets have been volatile since September. With inflation remaining higher, investors are concerned that the central bank could keep interest rates higher for a more extended period than earlier projected. Amid these concerns, the S&P/TSX Composite Index is down 3.7% since the beginning of September. Besides, the onset of the Israel and Palestine war has made investors nervous.
Given the uncertain outlook, investors should buy high-yielding dividend stocks to strengthen their portfolios and earn a stable passive income. Meanwhile, the following three TSX stocks, with dividend yields above 7%, look attractive at these levels.
Enbridge
Enbridge (TSX:ENB) is one of the top TSX dividend stocks to have in your portfolio due to its consistent dividend growth and high yield. The company operates a midstream energy business, with 51% of its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) generated from take-or-pay contracts and 47% from regulated assets. So, commodity price fluctuations will impact only 2% of its adjusted EBITDA, thus generating stable financials irrespective of the economic outlook.
Supported by its stable financials, ENB stock has delivered an average total shareholders’ return of 12% for the previous 20 years. Meanwhile, the company is continuing its $19 billion secured capital program, expecting to put $6 billion of projects into service by the end of 2024. It is also working on acquiring three utility businesses in the United States from Dominion Energy. These acquisitions could increase the company’s cash flows from low-risk utility assets, thus reducing the company’s business risks while creating long-term value for shareholders.
Considering these factors, I believe Enbridge, which has increased its dividends at an annualized rate of 10% for the previous 28 years, is well-positioned to maintain its dividend growth. Meanwhile, the ENB’s dividend yield stands at a juicy 7.96% and trades at an attractive NTM (next 12 months) price-to-earnings multiple of 15.9, making it an excellent buy in this volatile environment.
BCE
Second on my list would be BCE (TSX:BCE), one of Canada’s three top telecom players. With the rising demand for telecommunication services amid digitization, the company is expanding its broadband and wireless infrastructure. Management hopes to expand its 5G service to cover 85% of Canadians this year. It is also confident of delivering 650,000 new broadband locations this year.
Driven by these growth initiatives, management expects its revenue to grow by 1–5% while adjusted EBITDA could increase by 2–5%. Its free cash flows could also rise by 2–10%. So, I believe its future payouts are safe.
Meanwhile, BCE has been under pressure this year due to rising interest rates. Given its capital-intensive business, investors are worried that rising interest rates could increase interest expenses, thus hurting its margins. Amid these concerns, the company trades at an attractive NTM price-to-earnings multiple of 16.1 while offering a juicy forward dividend yield of 7.41%. Despite the recent volatility, I am bullish on BCE due to its healthy growth prospects.
TC Energy
My final pick would be TC Energy (TSX:TRP), which has raised its dividends uninterruptedly since 2000 while its forward yield stands at 7.8%. The midstream energy company has delivered an average annual total shareholder return of 11% since 2000, thanks to its long-term contracts and regulated assets. However, the company has been under pressure lately due to rising interest rates and losses caused by the spillage at its Keystone pipeline facility. Amid the weakness, it trades at 12.3 times analysts’ projected earnings for the next four quarters.
Meanwhile, the company is strengthening its balance sheet through a 40% stake sale in the Columbia Gulf and Columbia Gas systems for $5.4 billion. It expects to utilize the proceeds to lower its debt levels. Besides, it is also working on spinning off its liquids pipeline business and expects to complete it in the second half of 2024.
TC Energy is also progressing with its growth initiatives and hopes to put around $6 billion of projects into service this year. Given its growth initiatives, management is confident of growing its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) at a CAGR of 6% through 2026. So, management expects to increase its dividends by 3–5% in the coming years. So, I believe TC Energy would be an attractive buy for income-seeking investors.
