Dividend stocks have historically outperformed the broader equity markets. These companies are less susceptible to market volatility, given their solid underlying businesses, excellent cash flows, and consistent dividend payouts. With the broader equity markets remaining volatile amid growth concerns and geopolitical tensions, the following three top stocks are excellent buys. An investor can earn over $1,000 annually from dividends by investing $5,000 in each stock.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | INVESTMENT | DIVIDEND | TOTAL PAYOUT | FREQUENCY |
| ENB | $48.93 | 102 | $4,990.86 | $0.915 | $93.33 | Quarterly |
| BCE | $47.05 | 106 | $4,987.3 | $0.9975 | $105.74 | Quarterly |
| TRP | $53.66 | 93 | $4,990.38 | $0.96 | $89.28 | Quarterly |
| Total | $288.35 |
Source: Getty Images
Enbridge
Enbridge (TSX:ENB) transports oil and natural gas across North America through pipeline networks. It also has a strong presence in utility and renewable space. Its cash flows are stable and predictable, as 98% of its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) is from cost-of-service and contracted cash flows. Amid these healthy cash flows, the company has raised its dividends for 29 years. Its forward dividend yield stands at 7.48%.
Meanwhile, Enbridge is expanding its natural gas utility asset base. It has acquired two utility assets in the United States from Dominion Energy and is working on closing the Public Service Company deal. These acquisitions could increase its cash flows from low-risk utility businesses, thus reducing its business risks. Further, the company continues its organic growth and expects to make capital investments of $6-7 billion annually through 2026. These growth initiatives could boost the company’s cash flow, thus allowing it to continue its dividend growth.
BCE
Despite the broader weakness across the telecommunication sector, I am choosing BCE (TSX:BCE) as my second pick. It has lost around 36.5% of its stock value compared to its 2022 highs. The steep correction has dragged its NTM (next 12-month) price-to-earnings multiple down to 15.6 while raising its yield to 8.48%.
Amid unfavourable regulatory policies, the telco has reduced capital investments in pure fibre build and regulated businesses. Its workforce-related restructuring initiatives could increase its severance payments, thus impacting its free cash flows this year.
However, digitization and growth in remote working, learning, and shopping have expanded the demand for telecommunication services. Amid the growing demand, BCE is expanding its 5G infrastructure. The acquisition of 939 spectrum licenses could help it expand its 5G and 5G+ services. BCE’s growing customer base and recurring revenue sources could deliver stability to its cash flows, thus facilitating it to continue rewarding its shareholders with healthy dividends.
TC Energy
My final pick is TC Energy (TSX:TRP), which has been raising its dividends for 24 years at a compound annual growth rate of 7%. Its diversified utility-like business, with 97% of EBITDA generated from rate regulation and long-term contracts, generates stable and predictable cash flows, thus allowing it to raise dividends consistently. It currently pays a quarterly dividend of $0.96/share, with its annualized rate of $3.84/share and a forward dividend yield of 7.16%.
Meanwhile, TC Energy is expanding its asset base and expects to put around $7 billion of assets into service this year. It is also strengthening its balance sheet by divesting $3 billion of assets, which could help bring its debt-to-EBITDA ratio closer to its target of 4.75.
Further, TC Energy’s shareholders recently approved the spinoff of its liquid pipeline business. The spinoff could help the Calgary-based energy company lower its debt levels while focusing on expanding its natural gas business. Considering all these factors, I believe TC Energy would be an excellent buy.
