Investing in high-yield dividend stocks can help generate significant income over time. However, investors should take caution before investing in high-yield stocks and consider investing in shares of well-established companies with solid fundamentals and a growing earnings base. These companies will most likely sustain their high yield and pay consistent dividends in the coming years. Against this backdrop, here are three TSX stocks offering at least 6% dividend yields.
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Enbridge
Enbridge (TSX: ENB) is a reliable, high-yield Canadian dividend stock. This energy infrastructure company has consistently raised its dividend by an average of about 10% annually over the past 29 consecutive years, which shows its commitment to rewarding its shareholders.
Besides paying and growing its dividend, Enbridge stock offers a high yield of about 6.4% based on its closing price of $57.04 on October 24, which is well covered through its growing distributable cash flows (DCF).
The energy company’s financials are supported by its extensive liquid pipeline network and long-term contracts. Enbridge benefits from the high utilization of its assets, power-purchase agreements, and regulated cost-of-service tolling frameworks. These arrangements add stability to its operations and financials and help generate solid earnings and DCF per share regardless of commodity or economic cycles.
Enbridge expects its EPS and DCF per share to increase at a mid-single-digit rate in the long run. This will enable the company to expand its earnings at low to mid-single-digit rates during the same period. While Enbridge’s organic growth will cushion its earnings, its strategic acquisitions and growing renewables portfolio will support its payouts.
BCE
BCE (TSX: BCE) is another reliable, high-yield TSX stock. Its ability to grow profitably in all market conditions supports its payouts. The Canadian communication giant has been known for paying and increasing its dividends for years. To be precise, BCE has raised its dividend for 16 consecutive years and offers a high yield of about 8.7%.
Competitive headwinds and macro challenges have weighed on BCE stock, driving its yield higher. However, its yield is sustainable given BCE’s growing earnings base and focus on efficiently increasing its customer base and managing promotions.
BCE’s extensive broadband fibre network, fast 5G mobile services, and cost-efficient promotions will enable it to grow profitably. In addition, BCE’s cost reduction measures augur well for earnings growth, driving higher dividend payments. The company is also expanding its capabilities in high-growth segments such as digital advertising, cloud computing, and cybersecurity services. This move is likely to bolster its financials and support its payouts.
Pizza Pizza Royalty
Investors can also consider Pizza Pizza Royalty (TSX: PZA) stock for high-yield earnings. The company, which operates and franchises a network of quick-service restaurants, offers monthly dividend payouts.
The franchisor is focused on returning higher cash to its shareholders. In 2023, Pizza Pizza announced three dividend increases, reflecting 10.7% growth. Currently, it offers an attractive yield of 6.9%.
Pizza Pizza Royalty distributes all of its cash to investors after retaining the required reserves. Thanks to its growing same-store sales and diversified income sources, including revenues through royalty income and food and beverage sales, Pizza Pizza has been growing profitably and distributing cash to its shareholders.
Its national footprint across Canada, omnichannel presence, growing network of restaurants, strategic menu pricing, and ongoing food quality and technology investments will likely bolster its cash flows and dividend payouts.
