3 Cash-Gushing Dividend Stocks I’d Buy This August

Investing in dividend stocks such as Cogeco and Manulife should help you benefit from a steady dividend payout.

| More on:
money cash dividends

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Investors who want to earn a steady stream of passive income should increase their exposure to dividend stocks. Ideally, these dividend-paying companies should generate stable cash flows across business cycles, allowing them to maintain and even increase dividend payouts amid market downturns. Here are such cash-gushing dividend stocks I’d buy this August.

Created with Highcharts 11.4.3Cogeco + Manulife Financial + Enghouse Systems PriceZoom1M3M6MYTD1Y5Y10YALL21 Aug 202320 Aug 2024Zoom ▾Sep '23Nov '23Jan '24Mar '24May '24Jul '240www.fool.ca

Cogeco Communications stock

Valued at $2.7 billion by market cap, Cogeco Communications (TSX:CGO) is a telecom company that operates in two business segments. It offers internet, video, and internet protocol-based services to residential and small business customers through broadband fibre customers.

Cogeco pays shareholders an annual dividend of $3.42 per share, translating to a forward yield of 5.3%. In the last 12 months, the TSX dividend stock reported a free cash flow of $268 million or $5.27 per share, indicating a payout ratio of 65%.

Cogeco demonstrated solid performance in fiscal third quarter (Q3) of 2024 with revenue growth and healthy expansion of adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) margin due to an improving product mix and a focus on operational efficiency. It attributed growth in its Canadian telecom business to the expansion of its internet subscriber base.

Cogeco stock is cheap, trading at less than nine times forward earnings and at a 10% discount to consensus price target estimates.

Manulife Financial stock

A blue-chip Canadian company that operates in the recession-resistant insurance sector, Manulife Financial (TSX:MFC) pays shareholders an annual dividend of $1.60 per share, indicating a yield of 4.5%.

Manulife demonstrated positive momentum in Q2 with core earnings and new business growth of 9% and 23%, respectively. It aims to transform toward a higher return and lower risk business and recently closed the largest reinsurance transaction in Canada and the acquisition of CQS.

Manulife repurchased stock worth $1.1 billion and plans to buy back 90 million shares, returning over $3 billion to shareholders as part of its buyback program.

Priced at 9.5 times forward earnings, Manulife stock is cheap as its earnings are forecast to expand by 11.7% annually over the next five years. Analysts remain bullish and expect MFC stock to surge roughly 6% in the next 12 months.

Enghouse Systems stock

The final TSX dividend stock on my list is Enghouse Systems (TSX:ENGH), which offers you a dividend yield of 3.5%. In the last four quarters, Enghouse Systems reported a free cash flow of $127 million or $2.28 per share, while its annual dividend payment is $1.04 per share, indicating a payout ratio of 45.6%.

Enghouse provides supply chain solutions to enterprises and operates on a SaaS (software-as-service) model, resulting in recurring revenue. In Q2 of 2024, Enghouse reported revenue of $125.8 million, up 11% year over year. Its SaaS sales rose 18.6% to $85 million, accounting for 67.5% of total revenue.

An asset-light business model allowed Enghouse to benefit from operating leverage and improve operating profits by 30.5% to $33.5 million. Priced at 20.9 times forward earnings, Enghouse Systems stock is reasonably cheap, given its widening profit margins and stellar growth rates.

Analysts are bullish on the TSX stock and expect it to gain 30% according to consensus price targets.

Should you invest $1,000 in Canadian National Railway right now?

Before you buy stock in Canadian National Railway, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Canadian National Railway wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $20,697.16!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*.

See the Top Stocks * Returns as of 3/20/25

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 Aditya Raghunath has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Enghouse Systems. The Motley Fool has a disclosure policy.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Dividend Stocks

Dividend Stocks

3 Canadian REIT Stocks to Buy and Hold for the Next Quarter-Century

These three Canadian REITs trade cheaply and are highly reliable, making them some of the best stocks you can buy…

Read more »

A train passes Morant's curve in Banff National Park in the Canadian Rockies.
Dividend Stocks

1 Practically Perfect Canadian Stock Down 24% to Buy Now and Hold for Life!

CNR stock is a top Canadian stock for investors, especially with shares down on the TSX today.

Read more »

Canada national flag waving in wind on clear day
Dividend Stocks

The Best Canadian Stocks to Buy Right Away With $30,000

If you have $30,000 you're willing to invest, these are some of the first Canadian stocks to consider on your…

Read more »

rail train
Dividend Stocks

What to Know About Canadian Pacific Railway Stock for 2025

CP stock has now gone through a major merger, so what do investors have to look forward to?

Read more »

ways to boost income
Dividend Stocks

Top Canadian Value Stocks I’d Buy for Dividend Growth and Appreciation

If you are looking for income and capital appreciation, here are three Canadian value stocks for a great total return…

Read more »

coins jump into piggy bank
Dividend Stocks

The Smartest Canadian Stock to Buy With $2,000 Right Now

The company’s powerful combination of growth, income, and value, positions it well to deliver solid returns, making it a smart…

Read more »

Transparent umbrella under heavy rain against water drops splash background. Rainy weather concept.
Dividend Stocks

This 10.6 Percent Dividend Stock Pays Cash Every Single Month

Are you looking to invest for a rainy day? This 10.6% dividend stock pays cash every month, irrespective of the…

Read more »

A worker gives a business presentation.
Dividend Stocks

Market Dip: Opportunity or Risk This April?

This market dip might have investors worried, but should they be excited instead?

Read more »