The Canadian stock market has plenty of dividend stocks. Top Canadian sectors like financials, energy, infrastructure, and real estate are all known for paying big dividend yields. Within these sectors, there are stocks to own and stocks to avoid.
If you can be shrewd, you can avoid dividend traps, find stocks that pay stable dividends, and earn decent capital upside over time. Here are three stocks that dividend lovers should look at in December.
Fortis: An all-time dividend stock
Fortis (TSX: FTS) is a solid anchor for any portfolio focused on dividend income. Boasting a legacy of 50 years of consecutive annual dividend growth, it is hard to find a better income stock.
With a market cap of $26 billion and 10 utilities under its umbrella, Fortis is one of the largest pure-play utility stocks in Canada. The company operates regulated transmission and distribution utilities. These tend to provide extremely stable earnings streams.
This dividend stock grows by investing to expand its infrastructure. In return, it captures a stable, regulated return from those investments. Right now, Fortis has a five-year plan to spend $25 billion, and grow its rate base by a 6% compounded annual rate.
As its rate base grows, so too should its dividend. FTS yields 4.3% right now. However, an investor’s yield on cost should increase if management can meet its target to grow the dividend by 4-6% per year.
Granite REIT: A top Canadian real estate stock
Granite REIT (TSX: GRT.UN) is a top Canadian real estate investment trust (REIT). It owns 137 industrial properties across Canada, Europe, and America.
The industrial REIT focuses largely on logistics properties, but it also has manufacturing and distribution properties as well. The company has a list of investment grade tenants that have an average lease term of 6.4 years. Right now, occupancy is a bit low at 95.6%. It has several new developments that it is looking to lease up.
Once these properties are rented, investors will see a nice boost to cash flows per unit. Granite has an industry leading balance sheet with a net debt-to-value ratio of only 32%.
Granite stock yields 4.15% today. This real estate stock has raised its monthly dividend for the past 13 consecutive years. That means your dividend is very likely to keep going up in the years ahead.
Pembina Pipeline: One stock for a big dividend yield
If you want a large dividend with modest capital returns, Pembina Pipeline (TSX: PPL) is a decent stock. Pembina operates a mix of midstream, processing, storage/export terminals, and egress and collection pipelines.
The company will become even larger after it purchases the remaining 50% stake in the Alliance Pipeline and Aux Sable (NGL extraction/fractionation facility) from Enbridge.
Right now, over 80% of its earnings come from fee-based contracts. These contracts adequately support its dividend (an 80% payout of fee-based cash flow).
Pembina stock yields a 6% dividend. It has been raising its dividend by the-low single digits over the past few years. If you like stable assets, a strong balance sheet, and an attractive dividend, Pembina is a good long-term hold.
