2 TSX Dividend Stocks With Lucrative Yields in December 2023

BCE is one of the lucrative TSX dividend stocks generating strong cash flows, thus resulting in a steadily rising dividend.

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Dividends are an excellent feature of many TSX stocks. The trick is finding the dividends that are reliable, growing, and of course, backed by strong fundamentals.

Let’s take a look at two high-yield TSX dividend stocks with yields of up 10%-plus and explore why you should consider them today.

Peyto shareholders enjoying a high 10.5% dividend yield with this stock

As one of Canada’s leading natural gas producers, Peyto Exploration & Development Corp. (TSX:PEY) has a history of excellence. This is in part due to the very prolific basin that it operates in, the Alberta Deep Basin. Production from this basin is characterized as low risk and high reward.

It’s a production profile that generates high recoveries, lower costs, and of course lower risk and more predictability. These are the attributes that have kept Peyto’s operations very lean and efficient. As a result, these operational efficiencies have driven strong results throughout this TSX dividend stock’s history.

But of course, being a natural gas producer, Peyto’s results are largely driven by the price of natural gas, something that Peyto has no control over. And so, with natural gas prices down from 2022 highs, the company’s results have taken a hit. In the first nine months of 2023, revenue fell 17% to $730 million. Also, its funds from operations declined 23% to $470 million.

But the good news is that Peyto’s dividend has continued to rise. In fact, Peyto’s current annual dividend of $1.32 is 120% higher than last year. Also, Peyto’s business is an impressive cash flow generator. In fact, its free cash flow divided revenue for the last nine months was a very healthy 25%.

Looking ahead, Peyto continues to be well positioned to benefit from the structural changes that are coming to the North American natural has market. Increasing amounts of liquified natural gas, or LNG, are being shipping internationally, driving increased demand for Canada’s (and Peyto’s) low-cost and abundant natural gas reserves.

BCE: A TSX dividend stock in the telecom industry

As Canada’s largest telecom company, with an unmatched network and reach, BCE Inc. (TSX:BCE) enjoys a solid business. This business has supported a very generous dividend for years now. And recently, it has actually surpassed 7%, making it one of the most attractive high-yield dividend stocks in Canada.

This, to me, seems like a real disconnect from fundamentals. In the first nine months of 2023, BCE reported cash flow from operations of $5.6 billion and free cash flow of $1.8 billion. That translates to a healthy 10% of revenue. Moreover, BCE continues to use this free cash flow to improve its network and reward shareholders.

In fact, BCE’s business has supported years of healthy dividend growth and stability. During the last five years, BCE stock’s dividend has grown at a compound annual growth rate (CAGR) of 5.1%. Similarly, this annual dividend growth rate has held up in the 20 years as well.

The bottom line

Both Peyto and BCE are solid high-yield TSX dividend stocks in Canada with very juicy yields today. Although their stock prices have weakened recently, their underlying businesses remain solid. In other words, they are cash flow generating machines that continue to increase their dividends. This makes them worthy of your consideration to get some juicy yield into your portfolio.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Karen Thomas has a position in Peyto and BCE. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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