1 High-Yield Dividend Stock You Can Buy and Hold Forever

Industry giants that also happen to be established Dividend Aristocrats are worth holding onto for decades, virtually forever, for a reliable passive income.

| More on:
Increasing yield

Image source: Getty Images

The TSX has a healthy assortment of dividend stocks across various sectors. A higher concentration is naturally in Financials and Energy, two of the largest segments of the stock market. These sectors also include some of the most trusted and highly valued Dividend Aristocrats in the country, one of which is currently offering quite a generous yield and is a compelling pick for a stock you can hold forever.

A pipeline giant

Canada is home to multiple midstream, even pipeline giants. Still, TC Energy (TSX:TRP) stands out for several reasons, starting with its main pipeline business, which is transporting natural gas. The company is responsible for transporting 30% of the gas consumed in North America. This makes it one of the largest players in the cleaner side of the energy business on the continent.

The natural gas angle is one of the strongest arguments one can make about this company. Natural gas demand is unlikely to decline significantly enough in the coming decades, unlike oil, which has a higher rate of emissions.

TC Energy also has liquids transportation infrastructure, but its modest 4,900-kilometre pipeline for liquids pales in comparison to its massive 93,600-kilometre network of gas pipelines.

The company also has another business, power generation. Its current operating capacity is around 4.6 gigawatts (GW), three-quarters of which is emissionless. This partially offsets the emission profile associated with its main business and gives it some points from an ESG (environmental, social, and governance) investing perspective.

The stock and dividends

TC Energy stock, like a few other midstream stocks in Canada, didn’t get to participate in the powerful bullish phase that propelled many energy companies to great heights. In fact, it’s currently one of Canada’s most heavily discounted large-cap energy stocks, trading 29% lower than its post-pandemic peak.

A consequence of this discount is the dividend yield, which has risen to 7.3%, making it one of the highest-yielding Aristocrats in Canada right now. The valuation has also fallen to a reasonably fair level.

Yield is just one part of the appeal TC’s dividend holds for investors. The stock has a long history of raising its payouts — 22 consecutive years, making it one of the oldest Dividend Aristocrats in the energy sector. The dividend growth is modest, three cents per year for the past three years (making it sustainable as well). An unappealing part is the high payout ratio.

Foolish takeaway

While there are quite a few energy stocks you can hold long term for their dividends, TC Energy is among the handful of stocks from the sector that you might be able to hold virtually forever. The benefits of this long-term holding can be significantly enhanced if you can lock in a generous yield, like the one it’s offering right now.

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 Adam Othman 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.

More on Dividend Stocks

stock research, analyze data
Dividend Stocks

How Much to Invest to Get $500 in Dividends Every Month

TSX dividend stocks such as Enbridge, TD Bank, and Telus, can help you earn $500 in monthly dividend payments.

Read more »

Golden crown on a red velvet background
Dividend Stocks

Dividend Powerhouses: Canadian Stocks to Fuel Your Portfolio

These two top Canadian dividend aristocrats are some of the top stocks on the TSX to buy now and hold…

Read more »

Dial moving from 4G to 5G
Dividend Stocks

This Undervalued Dividend Stock is Worth Buying Right Now

Want an undervalued dividend stock with long-term potential and a juicy yield? Here's an option you may regret not buying…

Read more »

A worker gives a business presentation.
Dividend Stocks

1 Stock I’m Buying Hand Over Fist in July Despite the Market’s Pessimism

This top dividend stock is going through a rough patch, but don't let that count out all the growth we've…

Read more »

person on phone leaning against outside wall with scenic view at airbnb rental property
Dividend Stocks

2 TSX Stocks Poised to Have a Big Summer

Restaurant Brands International (TSX:QSR) stock and another darling that could be too cheap to ignore this summer.

Read more »

HIGH VOLTAGE ELECRICITY TOWERS
Dividend Stocks

Forget Fortis Stock: Buy This Magnificent Utilities Stock Instead

Looking for high dividends and returns? Then I'm sorry, but Fortis (TSX:FTS) stock probably isn't for you.

Read more »

Increasing yield
Dividend Stocks

2 High-Yield (But Slightly Risky) Stocks to Keep Your Eye on

Have these top TSX dividend stocks finally bottomed?

Read more »

Target. Stand out from the crowd
Dividend Stocks

2 Dividend Stocks I’d Buy if They Fall a Bit

Any near-term decline in these two top Canadian dividend stocks will make them look even more attractive.

Read more »