Enbridge (TSX: ENB) and Nutrien (TSX: NTR) are some of the most compelling dividend heavyweights on the Canadian stock markets today. Indeed, it’s been a rough sledding for the two firms of late. But every downward move offers more value and more yield for investors brave enough to consider initiating a position in any of the two Canadian dividend juggernauts.
At this juncture, I think there’s no shame in pursuing shares of either firm for their dividend yields. Yes, chasing yield is a dangerous game. But Enbridge and Nutrien are two blue chips that I believe will make it through macro headwinds without sustaining too much damage. Additionally, lower interest rates may make shares of each company far more desirable through the eyes of passive-income investors. At writing, shares of ENB sport a 7.6% dividend yield.
Enbridge’s dividend is worth reaching for if you’re in it for the next six years at minimum
That’s an impressive yield today, even as risk-free rates are still quite generous (in the 4-5% range for many 18-month Guaranteed Investment Certificates, or GICs, offered by a bank). As rates fall (and they probably will in the late summer, in my opinion), suddenly, a 7.6% yield looks that much more generous. And if the Bank of Canada takes us back to a sub-2% rate world, that 7.6% yield on ENB stock now looks mouth-watering.
If rates do retreat below 2% (lower inflation could allow the Bank of Canada to keep cutting), my bet is that Enbridge stock’s yield will be closer to 5%. Though still bountiful, it’s the long-term investor who grabs shares of a name like ENB today that will be able to “lock in” that dividend. And if there’s no dividend cut (I don’t think Enbridge will do it), investors may stand to get a good amount of capital gains alongside potential dividend hikes.
Personally, I view the potential from ailing dividend stocks as far more impressive than today’s tech high flyers. Why? You’re not just looking for capital gains; you’ll also get paid to wait for the tides to turn! Why not get paid to wait instead of owning shares solely for capital gains potential, especially in emerging tech stocks that are tough to value?
Nutrien’s payout also looks incredibly attractive if you seek exposure to agricultural commodities
At $72 and change, Nutrien stock looks dirt cheap now that it’s shed almost half of its value from the early 2022 peak level. The dividend yield sits at around 4.1%. Not nearly as attractive as Enbridge’s or even your average GIC. Though there’s a considerable amount of long-term negative momentum (that’s been building up for two years now), I consider the falling knife to be worth watching.
Should the selloff drag into year’s end, it may be worth loading up if the stock falls close to $60 per share. Even if it doesn’t, I’m not against owning shares here for the long haul if you’re a bull on potash or other fertilizers or just want more exposure to the agricultural scene in general. At the end of the day, Nutrien’s a wonderful firm. The winds are just working against it for the time being.
Bottom line
Though I like Nutrien here, I’m a bigger fan of Enbridge. The higher payout is a large reason why.
