Investing in dividend stocks can help investors create a passive stream of recurring income. As dividend payouts are not guaranteed, you need to identify stocks positioned to expand cash flows and earnings consistently across market cycles. Ideally, these dividend stocks should be part of expanding addressable markets, fueling their dividend growth and increasing the effective yield for shareholders over time.
Here are the three best TSX dividend stocks you can buy right now.
Enbridge stock
Among the largest companies in Canada, Enbridge (TSX: ENB) is a popular dividend stock and offers you a tasty yield of 7.7%. While Enbridge is part of the highly cyclical energy sector, it has raised the dividend by 10% annually in the last 28 years, showcasing the resiliency of its cash flows.
A majority of Enbridge’s cash flows are tied to inflation and backed by long-term contracts, making the energy giant almost immune to fluctuations in commodity prices. It enjoys a competitive moat and continues to expand its base of cash-generating assets, driving future earnings and dividends higher.
Priced at 16 times forward earnings, Enbridge stock is quite cheap and is priced at a discount of 18% to consensus price target estimates.
Brookfield Asset Management stock
An alternative asset manager, Brookfield Asset Management (TSX: BAM) pays shareholders an annual dividend of $1.75 per share, translating to a dividend yield of 4.1%.
With US$850 billion in assets under management, BAM provides you with exposure to verticals such as renewable power, infrastructure, real estate, credit, and private equity. BAM invests in real assets that generate stable earnings, which remain critical to the global economy.
The company has raised US$61 billion in total capital in the first nine months of 2023, including US$26 billion in the third quarter (Q3). Moreover, BAM closed its sixth private equity strategy at US$12 billion, which is its highest ever to date.
Brookfield Asset Management reported distributable earnings of US$568 million in Q3 and US$2.2 billion in the last 12 months. Its fee-based earnings accounted for 100% of distributable earnings in the last 12 months and remains a key driver for the company’s future dividend growth.
BAM’s capital deployment efforts allowed it to end Q3 with US$565 million in fee-related earnings, an increase of 8% year over year. Comparatively, fee-bearing capital also rose 8% to US$440 billion in Q3 of 2023.
Nuvei stock
The final dividend stock on my list is Nuvei (TSX: NVEI), a high growth profitable fintech company. Valued at $3.6 billion by market cap, Nuvei stock trades 85% below all-time highs, allowing you to buy a quality TSX stock at a steep discount.
The total payment volume processed on the Nuvei platform increased by 62% to US$141.2 billion in Q3, allowing Nuvei to end the quarter with revenue of US$868.4 million, up 39% compared to the year-ago period. Moreover, e-commerce accounted for 89% of total volume.
Nuvei currently pays shareholders an annual dividend of $0.55 per share, indicating a forward yield of 2.1%. Priced at nine times forward earnings, Nuvei stock trades at a discount of 60% to consensus price target estimates.
