Quality dividend stocks are a must for a balanced portfolio. These stocks are less susceptible to market volatility, given their regular payouts, thus making your portfolio stable. Historically, dividend stocks have outperformed the broader equity markets. Meanwhile, here are three top dividend stocks that you can buy under $30.
Telus
Given their steady cash flows and resilient long-term growth prospects, telecommunication companies are an excellent addition to your portfolio. The high initial investments and regulatory approvals have created a barrier for new entrants, thus allowing existing players to retain their market share. The growing demand amid digitization has created a long-term growth potential for telcos. So, I have chosen Telus (TSX: T), one of the three top telecommunication companies, as my first pick.
Last week, the company reported an excellent fourth-quarter performance, with its top line and adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) increasing by 2.6% and 9.4%, respectively. The company has also acquired spectrum licenses for $620 million, which could allow it to expand its 5G service across Canada. Amid these growth initiatives and expanding customer base, Telus expects its revenue to grow 2-4% this year while its adjusted EBITDA could expand by 5.5-7.5%. Also, the management hopes to generate free cash flows of $2.3 billion, thus making its future dividend payouts safer.
Telus currently pays a quarterly dividend of $0.3761/share, with its forward yield at 6.36%. Given its healthy growth prospects and solid underlying business, the company is confident of raising its quarterly dividend by 7-10% annually through 2025.
AltaGas
AltaGas (TSX: ALA) is a diversified energy infrastructure company that operates low-risk utility and midstream energy businesses. The company earns around 80% of its adjusted EBITDA from low-utility assets and take-or-pay or fee-for-service contracts, thus delivering stable and predictable cash flows. Supported by these healthy cash flows, the company pays a quarterly dividend of $0.28/share, with its forward yield at 4.39%.
The Calgary-based energy company recently acquired Alberta Montney Infrastructure assets, which could strengthen its midstream business. Also, it has planned to invest around $1.3 to $1.5 billion annually until 2028, expanding its midstream and utility asset base. Bolstered by these investments, the company’s management expects its earnings per share to grow at mid-single digit through 2028.
The company intends to keep its payout ratio between 50-60% and has planned to raise its dividend by 5-7% annually for the next five years. So, AltaGas would be an excellent dividend stock to have in your portfolio.
Pizza Pizza Royalty
Pizza Pizza Royalty (TSX: PZA) would be my final pick, given its asset-light business model and stable cash flows. The company, which owns and operates Pizza Pizza and Pizza 73 brand restaurants through franchisees, collects royalties from its franchisees based on their sales. So, the company’s financials are immune to price rises. The company witnessed solid same-store sales last year, driving its royalty income.
Meanwhile, the company has added 45 restaurants to its royalty pool from January 1, which could boost its financials in the coming quarters. So, I believe its future payouts will be safe. Currently, the company offers a forward dividend yield of 6.45% and trades at an attractive forward price-to-earnings multiple of 15.9, making it an attractive buy.
