Amid easing inflation and the hope of interest rate cuts by the United States Federal Reserve, the global equity markets are on an upward momentum. The S&P/TSX Composite Index is up 11% this year. However, concerns over a slowdown in global growth and geopolitical tensions persist. So, if you expect the equity markets to turn volatile, you can buy the following three reliable stocks offering over 5% dividend yields.
Enbridge
Enbridge (TSX: ENB) is a diversified energy company that operates a pipeline network to transport oil and natural gas across North America. It is also involved in the natural gas utility and renewable energy space. Supported by its low-risk, regulated midstream energy business, the company has delivered an average total shareholder return of 12% for the last 20 years.
Besides, it generates around 98% of its cash flows through long-term cost-of-service contracts, and around 80% of its EBITDA (earnings before interest, tax, depreciation, and amortization) is inflation-indexed. So, the energy firm generates healthy cash flows irrespective of the market conditions, thus allowing it to raise its dividends for the previous 29 years at a CAGR (compound annual growth rate) of 10%. ENB’s forward dividend yield currently stands at an attractive 6.9%.
Moreover, Enbridge has expanded its natural gas utility assets by acquiring two utility assets in the United States. It is also working on closing the third deal, which management hopes to complete this quarter. Further, it is progressing with its $24 billion secured capital program, which would expand its midstream, utility, and renewable assets. Considering these growth initiatives and a healthy financial position, I expect Enbridge to continue its dividend growth, thus making it a reliable stock to have in your portfolio.
Canadian Utilities
The second pick would be Canadian Utilities (TSX: CU), which transports and distributes electricity and natural gas and is expanding its footprint in the renewable energy space. Supported by its low-risk utility business, the company has raised its dividends for 52 consecutive years, the longest period of consecutive dividend growth by a Canadian public company. Besides, its forward dividend yield stands at an attractive 5.4%.
Meanwhile, Canadian Utilities plans to invest $4.3 billion to $4.7 billion from 2024 to 2026, expanding its rate base at an annualized rate of 3.5-4.3%. It also has several renewable energy projects in the developmental pipeline with a total production capacity of 1.3 gigawatts. Along with these growth initiatives, tariff increases and improving operating efficiencies could boost its financials, thus allowing it to maintain its dividend growth.
Bank of Nova Scotia
Bank of Nova Scotia (TSX: BNS), which has been paying dividends uninterruptedly since July 1833, is my third pick. Yesterday, it reported its third-quarter earnings for fiscal 2024, with its Canadian Banking, International Banking, and Global Wealth Management segments reporting adjusted earnings growth. Besides, its Common Equity Tier 1 improved from 12.7% in the prior year’s quarter to 13.3%, thus strengthening its balance sheet.
Further, BNS has made a strategic investment to grow and diversify its United States business by acquiring a 14.9% stake in KeyCorp, a United States-based financial services company. This transaction could boost its near-term returns while providing an opportunity to strengthen its position across North America.
Moreover, BNS trades at 10 times analysts’ projected earnings for the next four quarters while offering an attractive dividend yield of 6.3%, making it an excellent buy.
