Canadian stocks with high yields could be a great choice for investors seeking regular passive income. Moreover, as high yields lead to an increased cash inflow, they can reduce an investment’s payback period.
Fortunately, the TSX has several fundamentally strong companies with reliable payouts. Moreover, a few of these high-quality dividend stocks offer high yields, making them compelling investments that generate steady income.
With this background, here is my top no-brainer, high-yield dividend stock to buy in 2024 for generating dependable passive income for decades.
No-brainer, high-yield stock
Investors seeking high yield for worry-free passive income could consider shares likely BCE, SmartCentres Real Estate Investment Trust, and Enbridge (TSX: ENB). While all these stocks are solid investments for earning high yields, I recommend Enbridge for its proven track record of reliable dividend payments, management’s commitment to enhancing shareholders’ value, visibility over future earnings and distributable cash flows (DCF) growth, and sustainable yield.
For example, Enbridge pays and increases its dividends irrespective of the economic and commodity cycles. It has uninterruptedly paid dividends for over 69 years. Moreover, the energy infrastructure company that transports oil and gas has increased dividends for 29 consecutive years. Furthermore, Enbridge’s dividend grew at a compound annual growth rate of 10% during the same period, the highest among its peers.
While Enbridge has consistently increased its dividends, its payouts are reliable. For instance, this energy company even paid and increased its dividend during the 2008 financial crisis and the COVID-19 pandemic. This shows the resiliency of Enbridge’s dividend payouts and management’s commitment to rewarding its shareholders.
Enbridge’s quarterly dividend stands at $0.915 per share, translating into a high yield of 7.5% based on its closing price of $48.95 on July 15.
While Enbridge is a dependable, high-yield stock, several factors suggest it will continue to increase its dividends in the upcoming years and enhance its shareholders’ value.
Enbridge’s dividend to increase
Enbridge is a leading player in North America’s energy transportation sector. It has extensive energy infrastructure assets strategically positioned between key supply basins and demand markets. This strategic positioning ensures strong utilization of its network, driving its earnings, distributable cash flow (DCF), and dividends.
Furthermore, Enbridge’s highly diversified revenue stream adds stability to its cash flows, mitigating risks associated with market volatility. In addition, Enbridge secures its income through long-term contracts, power-purchase agreements (PPAs), regulated cost-of-service tolling frameworks, and other low-risk commercial arrangements. This framework ensures steady cash flow regardless of market conditions.
Enbridge continues to invest in both conventional and low-carbon energy assets. This positions it well to capitalize on the energy demand. Beyond organic growth, Enbridge will likely benefit from strategic acquisitions, which will enhance its DCF per share and contribute to long-term stability and growth.
Enbridge’s management expects the company’s earnings per share and DCF per share to grow at a mid-single-digit rate in the long term. This indicates that Enbridge could continue to increase its dividend at a similar pace.
Bottom line
Enbridge’s top-tier energy infrastructure network, diverse revenue streams, and resilient earnings and DCF per share suggest that Enbridge will likely enhance its shareholders’ value through higher dividend payments. Moreover, Enbridge targets a payout ratio of 60-70% of DCF, which is sustainable.
