Dividend-paying stocks with high yields are a great source of passive income post-retirement. Besides providing regular income, dividend stocks also have the potential to offer decent capital gains over time and act as a hedge against inflation. However, dividend payments are not guaranteed. Thus, retirees should focus on high-quality, dividend-paying companies with a solid payout history and a growing earnings base.
The TSX has several fundamentally strong dividend stocks with high yields, reliable payment histories, resilient business models, and a growing earnings base to support future payouts.
With this backdrop, here are two Canadian stocks retirees could consider buying in July. These dividend stocks offer at least a 7% yield.
BCE
With an attractive yield of 8.9% based on the current closing price of $45.03, BCE (TSX:BCE) is one of the top high-yield dividend stocks retirees could consider buying in July. BCE is known for rewarding its shareholders with higher dividend payments. The company announced a 3.1% increase in its dividends for 2024. Overall, it has raised its dividends for 16 consecutive years, which shows the resiliency of its payouts and management’s commitment to enhancing shareholders’ value.
BCE provides telecommunication services that are deemed essential for the economy. This provides stability to its operations, financials, and payouts.
While BCE is witnessing a heightened competitive environment, it is leveraging its leading broadband networks and products to enhance its user base, supporting its earnings and dividend distributions. Moreover, the company is focused on improving efficiency via cost reduction measures, which will position it well to boost earnings and drive higher dividend payouts in the upcoming years.
In addition, BCE’s efforts to capitalize on new high-growth areas such as digital transformation, and cloud and security services augur well for growth and dividend payments.
Enbridge
Enbridge (TSX:ENB) is another compelling high-yield dividend stock retirees could consider for dependable passive income. This energy infrastructure giant is famous for its stellar dividend growth history, high yield, resilient business model, and ability to grow earnings and distributable cash flows (DCF) in all market conditions.
For instance, this Canadian energy infrastructure giant has paid dividends for 69 years and increased it for 29 consecutive years at a CAGR (compound annual growth rate) of 10%. Besides higher payouts, it offers a lucrative yield of 7.4%, based on the market price of $49.22 as of July 16.
The company’s diversified revenue stream, power-purchase agreements, and long-term contracts position it well to consistently grow its DCF per share, supporting its dividend payouts. Further, Enbridge’s investments in conventional and renewable energy assets will likely expand its earnings base and help capitalize on future energy demand. Moreover, Enbridge’s solid balance sheet and focus on growth opportunities, including strategic acquisitions, will likely enhance its cash flows, thus supporting higher dividend payments.
It’s worth noting that Enbridge could increase its dividends at a low- to mid-single-digit rate in the long term as its earnings per share and DCF per share are projected to grow at a CAGR of approximately 5%. Further, Enbridge’s payouts are well-covered and sustainable in the long term.
