Should You Buy the 3 Highest-Yielding Dividend Stocks in the TSX Composite?

The highest dividend yields may not always mean the best stock. But there is certainly some gold to be dug out here.

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Canadian investors continue to seek out dividend stocks during this economic uncertainty. Passive income through dividends certainly provides a lot more security when you’re considering an investment. Plus, you can look forward to sometimes incredibly high dividend yields!

So that’s what we’re going to focus on here today: high dividend yields – companies that offer the highest of the high on the TSX today. But what’s more, let’s look at whether that dividend is worth it in terms of an investment.

Slate Office REIT

First up we have Slate Office REIT (TSX:SOT.UN) with a dividend yield at 14.81%. Now that might look high, but the dividend is at $0.12 per share annually. So that means the current share price is at just $0.81 per share.

That’s quite the drop from 52-week highs at $4.31. So, what happened? It seems the dividend stock dropped from a combination of factors, including declining earnings, high debt, and distribution cuts. But the question is whether now is the time to buy.

After the distribution cut, many got out of there at a sprint. But now, analysts believe the stock could be undervalued. Especially as full-year revenue hit $197.6 million during 2023, higher than the previous year and certainly an improvement. However, its net loss remains at $113.1 million, far higher than 2022 levels.

For now, even with that high dividend analysts believe the stock is a “Hold.” There will have to be a significant improvement in earnings as well as the debt before that dividend is stable once more.

Brookfield Global Infrastructure

Another dividend stock you might want to consider is the Brookfield Global Infrastructure Securities Income Fund (TSX:BGI.UN). This fund offers a 16.17% dividend yield! And it is in a much higher range compared to Slate. It trades at $4.09, with a dividend of $0.60 per share annually.

What’s more, this share price is nearing 52-week highs rather than dropping away from it. Even still, it’s quite the drop from all-time highs back in 2021. The closed-end investment fund invests in publicly traded global infrastructure companies, and this has offered investors security in the past.

However, amid higher interest rates this has shifted. Now analysts are concerned about its limited growth potential, as well as exposure to energy companies that hold high levels of debt. Even still, the high dividend makes it attractive. And Brookfield has a history of buying when investments are down, and making them work well for them.

So while it’s not a hot buy yet, it’s certainly one I would keep on your radar.

Cardinal Energy

Finally, speaking of energy stocks, we’ll look at Cardinal Energy (TSX:CJ) with a dividend yield of 10.73% as of writing. Shares are currently at $6.75 as of writing, with a dividend at $0.72 annually.

Now this company looks right in the middle in terms of performance. The company hit 52-week lows of $5.75 and highs of $7.95. So at $6.75 it looks like perhaps we’re seeing some recovery here. Especially with a price-to-earnings ratio at 5.5, well below many other peers.

What’s more, the company looks well positioned for growth. It’s a moderate buy recommendation by analysts, who like the stock for its high dividend yield and strong balance sheet. The company seems as though it can manage its debt levels, and that could lead to more future growth.

However, some analysts do believe that this current dividend yield doesn’t seem sustainable. Fluctuating oil prices and the potential for cash burn could lead to a cut. So that’s certainly something to be aware of. Furthermore, there may be limited growth potential, as there doesn’t seem to be anything lined up for the company.

Overall, however, it seems to be the best performing of the batch. So if there’s one to consider on the TSX today, it’s likely to be Cardinal Energy stock.

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 Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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