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 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 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.