After rising over 1% last month, the S&P/TSX Composite Index is down 1.3% in the first two days of trading. Weak economic data from the United States have increased fears of a global slowdown, leading to a pullback despite the Bank of Canada’s rate cuts. Given the volatile equity market, investors could buy high-yield dividend stocks to earn a stable passive income. Meanwhile, here are my three top picks.
Enbridge
Enbridge (TSX: ENB) is a Canadian diversified energy company with a presence across midstream, utility, and renewable energy businesses. Given its regulated cash flows and inflation-indexed EBITDA (earnings before interest, tax, depreciation, and amortization), the company offers more visibility of its cash flows. Supported by its healthy cash flows, the company has raised its dividends at a 10% CAGR (compound annual growth rate) for the previous 29 years, while its forward yield is currently at 6.70%.
Meanwhile, the midstream energy company continues to expand its asset base through its $24 billion secured capital program. In 2024, it expects to invest around $6 billion while putting $4 billion of projects into service. Further, the company has also strengthened its utility assets by acquiring two natural gas utility facilities in the United States from Dominion Energy. It is also working on closing the third deal, which could make Enbridge the largest natural gas utility company in North America. These acquisitions would lower its business risks and stabilize its cash flows. Considering all these factors, I believe Endrige’s future dividend payouts will be safer.
NorthWest Healthcare Properties REIT
NorthWest Healthcare Properties REIT (TSX:NWH.UN) owns and operates 186 healthcare properties with a gross leasable area of 16.1 million square feet. It has signed long-term lease agreements with government-backed tenants, thus enjoying high occupancy and collection rates. Around 85% of its rents are inflation-indexed, shielding its financials against rising commodity prices and wage inflation.
Amid the high interest rate environment, NWH had adopted a non-core asset sales program to lower its leverage. Under this program, the company has divested 46 non-core assets, raising around $1.4 billion. The healthcare real estate investment trust has utilized the net proceeds from these asset sales to pay off high-interest-bearing debt, thus strengthening its financial position. The company focuses on creating next-gen assets to deliver long-term earnings growth for its shareholders. Given its improving financial position and healthy growth prospects, I believe NWH would continue to reward its shareholders with healthy dividends. Meanwhile, the company currently pays a monthly dividend of $0.03/share, with its forward yield at 7.03%.
Telus
My final pick is Telus (TSX: T), which offers a forward dividend yield of 6.93%. The unfavourable policy changes and higher interest rates have led to a selloff in the telecom sector over the last two years. Meanwhile, the Bank of Canada has slashed interest rates three times this year and could continue with its monetary easing initiatives. So, I believe Telus stock could have bottomed out, thus creating excellent buying opportunities.
Further, telecom companies enjoy healthy cash flows due to their recurring revenue streams. Supported by these healthy cash flows, Telus has raised its dividends 26 times since May 2011. The company continues strengthening its 5G and broadband infrastructure, with its 5G network covering 86% of the country’s population by the end of the second quarter. Given its continued capital investments, Telus is well-positioned to benefit from the rising demand for telecom services in this digitally connected world. Given its growth prospects and falling interest rates, I believe Telus’s future dividend payouts are safer.
