High-yield dividend stocks can be an excellent way to start a passive-income stream. However, it’s essential to choose companies with solid fundamentals, a commitment to rewarding shareholders, and a consistent history of paying dividends. Canadian stocks that meet these criteria offer reliable income now and are likely to increase their payouts over time. These attributes make them screaming buys right now. Let’s dive into three stocks that are ideal picks for regular passive income.
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Telus stock
Telus (TSX: T) is an attractive investment for investors seeking dependable, high-yield dividend stocks. Canada’s leading communication company is known for rewarding its shareholders through its multi-year dividend-growth program.
Telus’s growing customer base, lower churn rate, leading network infrastructure, and focus on improving efficiency drive its earnings and support dividend payments. The company has consistently raised its dividends since initiating its multi-year dividend-growth program in 2011. Further, it has paid about $21 billion in dividends since 2004.
The diversified telecom company continues to improve the coverage and reliability of its network, which will drive the subscriber base. Furthermore, its 5G network covered over 86% of Canada’s population on June 30, 2024, up from approximately 84% on June 30, 2023. Telus is expanding its fibre footprint by connecting more homes and businesses directly to fibre. In addition, it has increased broadband internet speeds, expanded its IP TV video-on-demand library and high-definition content, and enhanced the marketing of data products and bundles. These efforts are improving churn rates.
Telus’s growing customer base, lower cost to serve, and focus on driving higher margin per user will likely drive its earnings and support higher dividend payments. It offers a compelling yield of 7.2%. Moreover, its payout ratio of 60-75% of free cash flow is sustainable in the long term.
Enbridge stock
With its high yield of about 6.4%, resilient payouts, and growing dividend, Enbridge (TSX: ENB) is a no-brainer stock for passive-income investors. The energy infrastructure company has paid dividends for over 69 years and raised them for 29 consecutive years. This consistent track record of dividend growth shows the resiliency of Enbridge’s earnings and payouts.
Enbridge’s diversified income sources and contractual arrangements to support volume and reduce commodity price risk augur well for growth. Further, its multi-billion-dollar capital projects, growing utility-like portfolio, and continued investments in conventional and clean energy sources will likely support its earnings and cash flows and drive future dividends.
The company’s management remains committed to rewarding shareholders by steadily increasing dividends. With a goal to grow earnings by about 5% over the long term, Enbridge is well-positioned to boost future payouts.
Scotiabank Stock
Scotiabank (TSX: BNS), like its peers, has been known for paying dividends for more than a century. This Canadian banking giant has been paying dividends since 1833, making it a reliable stock for generating steady passive income. Further, Scotiabank has raised its dividend by about 6% annually since 2013.
Scotiabank’s exposure to high-growth banking markets, diverse products and services, and focus on improving efficiency enable it to grow its earnings and drive higher dividend payments.
Higher revenue from deposit momentum and net interest margin expansion, steady credit performance, positive operating leverage, and a strong balance sheet will support Scotiabank’s earnings in the coming years. Further, its strategic investment in KeyCorp will likely support profitability. The financial services giant maintains a conservative payout ratio and is offering a high yield of 5.8% based on its closing price of $73.52 on November 5.
