3 High-Yield Stocks for Considerable Passive Income (6% Dividends!)

Enbridge Inc (TSX:ENB) is a high yield stock with a yield well above 6%.

| More on:
Increasing yield

Image source: Getty Images

Are you looking to add considerable passive income to your portfolio? In some ways, that’s not the easiest thing to do. There are plenty of high yield dividend stocks out there, but many of them don’t score the best on the ‘quality’ factor: many stocks acquire high yields by justifiably being beaten down in the markets, or paying excessive payout ratios. These stocks are ones to be avoided. However, there are other dividend stocks that are very much worth the investment. In this article, I will explore three dividend stocks with yields well above 6%.

Enbridge

Enbridge Inc (TSX:ENB) is a Canadian pipeline company with a 7.5% dividend yield. The company has grown its dividend by 5.75% per year over the last five years, and has raised its dividend for nine years in a row.

How is Enbridge doing as a company? Truthfully, 2023 wasn’t the company’s finest hour. That year, the company’s revenue declined 12.7% and its earnings 44%. A judge ordered the company to re-route part of its pipeline that goes through Wisconsin, which will cause an increase in costs in the future. If things keep going this way, then ENB stock won’t give investors much of a capital gain, but the high yield dividend should continue being paid.

First National

First National Financial (TSX:FN) is a Canadian non-bank lender with a 6.2% dividend yield. It has increased its dividend by 5.3% per year over the last five years, and has raised the dividend for 12 years straight. In its most recent quarter, it had $143 billion in mortgages under administration, $563 million in revenue, and $83.6 million in net income. These figures were up 10%, 26%, and 108% year over year, respectively. As a lender, First National is seeing its lending income rise, thanks to all the interest rate hikes that took place in 2022 and last year. If rates stay high, FN’s earnings will stay high too.

Bank of America

Bank of America Preferred Shares (NYSE:BAC.PRL) are preferred shares offered by the Bank of America corporation. Bank of America is a U.S. bank, the second largest in the country. Canadians may have some experience with it in the form of credit cards it once offered: the bank used to sell MBNA branded credit cards here in Canada, but sold the business to LLoyds Bank.

Bank of America’s common stock is a fairly enticing investment. The bank has a 28% profit margin, and has grown its earnings by 18% per year over the last three years. If you’re looking for yield, the bank’s common shares won’t do you much good: they only yield about 3%. The Series L preferred shares are a different story. These yield 6.22%, and they have a conversion option that lets you convert each one to Bank of America common shares at $50. If Bank of America common shares go well above $50 someday, then exercising the conversion option could be a good way to boost the return you get on BAC.PRL, which already has a high dividend yield as it is.

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.

Bank of America is an advertising partner of The Ascent, a Motley Fool company. Fool contributor Andrew Button has positions in Bank of America. The Motley Fool recommends Bank of America and Enbridge. The Motley Fool has a disclosure policy.

More on Dividend Stocks

Question marks in a pile
Dividend Stocks

Where Will Brookfield Infrastructure Partners Stock Be in 5 Years?

Brookfield Infrastructure Partners (TSX:BIP.UN) kicked off 2024 with a bang. Where will it be in five years?

Read more »

Retirement
Dividend Stocks

Golden Years Gain: Your CPP Benefits at Age 70

CPP users delaying pension payments until 70 will receive substantial monthly income streams in the golden years.

Read more »

data analytics, chart and graph icons with female hands typing on laptop in background
Dividend Stocks

3 Dividend Stocks You Can Safely Hold for Decades

Top TSX dividend stocks are on sale.

Read more »

Dividend Stocks

Where Will Canadian Utilities Stock Be in 5 Years?

Canadian Utilities (TSX:CSU) is a classic example of a stock where the dividend is all you get. Can the company…

Read more »

Man holding magnifying glass over a document
Dividend Stocks

2 Stocks I’m Watching for Big Passive Income

Consider Bank of Nova Scotia (TSX:BNS) and another top passive-income play to power your dividend portfolio!

Read more »

Target. Stand out from the crowd
Dividend Stocks

2 Dividend Stocks to Double Up on Right Now

These top TSX stocks have increased their dividends annually for decades.

Read more »

bulb idea thinking
Dividend Stocks

2 Supercharged Dividend Stocks to Buy if There’s a Stock Market Sell-Off

These two top stocks offer attractive yields, have reliable operations and are dividend aristocrats, making them two of the best…

Read more »

question marks written reminders tickets
Dividend Stocks

Better Buy: Loblaw Companies or Metro Stock?

Loblaw Companies (TSX:L) stock is riding on recent momentum. Meanwhile, Metro (TSX:MRU) is executing for future earnings growth.

Read more »