Investing in dividend stocks, particularly those with high and sustainable yields, is a smart strategy for generating recurring passive income for decades. Further, these high-yield dividend-paying stocks can act as a hedge against inflation.
Against this background, let’s look at the three Canadian stocks offering ultra-high yields of over 7%. These stocks are backed by fundamentally strong businesses, suggesting that their payouts are sustainable.
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BCE
BCE (TSX: BCE) is a top stock for investors seeking reliable, ultra-high dividend yields. This Canadian communication services provider is known for consistently paying and growing dividends, which reflects the resilience of its payouts in all market conditions.
BCE has an impressive streak of 16 consecutive years of dividend growth. Moreover, it currently pays a quarterly dividend of $0.998 per share, translating into a high yield of about 8.7% (based on a closing price of $46.09 as of October 15). BCE’s high yield is backed by its strong earnings base, focus on expansion into high-growth sectors, and commitment to enhancing shareholders’ value.
Thanks to its extensive broadband fibre network and fast 5G mobile services, BCE is consistently growing its user base. Furthermore, BCE is managing promotions more effectively and profitably, driving new user growth.
In addition, BCE is focusing on capitalizing on growth areas like digital advertising, cloud computing, and security services. These initiatives are likely to contribute to its top line and drive earnings and dividend payments.
Firm Capital Mortgage Investment Corporation
Investors could consider Firm Capital Mortgage Investment Corporation (TSX: FC) for its high yield. Firm Capital offers residential and commercial real estate financing. It also provides loan servicing, asset management, and investment-related services. This non-bank lender pays a monthly dividend of $0.078 per share and offers an attractive yield of about 8.1%.
Firm Capital Mortgage Investment strategically invests in debt and equity across Canada’s private and public real estate markets, which generates solid interest, fees, and income from investments. Moreover, the company’s focus on short-term financing, a conservative lending approach, and strong underwriting capabilities help it maintain solid earnings and support its dividend payouts.
Overall, this financial services company’s high yield and monthly payouts make it a compelling passive income stock.
SmartCentres Real Estate Investment Trust
REITs are known for their high payout ratios and monthly distributions, making them top stocks for passive income. Within REITs, SmartCentres Real Estate Investment Trust (TSX: SRU.UN) is an attractive investment for its durable dividends and high yield. The firm pays a monthly dividend of $0.154 per share and offers a high yield of 7.1%.
SmartCentres REIT owns a defensive portfolio of real estate, including high-traffic retail shopping centres and mixed-use properties. Moreover, it has a high-quality tenant base of large retailers that drives occupancy and rent collection and supports its net operating income (NOI) and payouts. Further, it benefits from solid leasing demand from both its existing tenants and new retailers.
The company’s management expects the leasing and renewal rate momentum to sustain in the coming quarters. Meanwhile, SmartCentres focuses on revenue diversification through expansion into mixed-use developments such as residential, office, and self-storage properties, which will likely accelerate its growth rate. Also, SmartCentres REIT’s extensive land bank provides a solid base for future growth.
