Despite the fact that interest rates have already started to decline significantly both in Canada and the United States, something that’s typically positive for most stocks, there continue to be several high-quality dividend stocks trading cheaply for investors to buy right now.
Lower interest rates are positive for stocks for several reasons. First off, as interest rates decline, naturally, market sentiment begins to improve. In addition, lower interest rates mean the cost of carrying debt declines, which generally impacts companies’ margins positively.
Plus, with dividend stocks, falling interest rates typically lead to declining dividend yields, which in turn drive stock prices higher.
So, with that in mind, if you’ve got cash on the sidelines and are looking for top dividend stocks to buy today, here are two no-brainer investments you can buy right now.
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One of the best defensive growth stocks in Canada
Dividend stocks are ideal investments for several reasons. Like many other companies, dividend stocks have the potential to earn investors capital gains. Plus, they can also generate significant passive income. One of the most important reasons why dividend stocks are some of the best investments you can buy, though, is for their reliability.
High-quality dividend stocks are often consistently generating significant cash flow. In fact, in order to even pay a dividend in the first place, stocks have to demonstrate the ability to earn a profit constantly.
So, when looking to buy a dividend stock that’s reliable and can generate both passive income and capital gains, Brookfield Infrastructure Partners (TSX: BIP.UN) is clearly a no-brainer.
First off, Brookfield is extremely reliable, considering it owns a tonne of essential infrastructure assets such as utilities, ports, railroads, data centres, telecom towers, and more. In addition, not only does it own several different types of infrastructure assets, but its portfolio is also diversified all over the world.
This ensures that Brookfield’s operations are highly robust and that the stock can consistently generate significant cash flow.
However, in addition to its defensive assets that make it such a reliable investment, Brookfield is also consistently selling off mature assets and recycling that cash into new opportunities. This is why it’s also such an excellent long-term growth stock.
In fact, over the long haul, management targets annual returns of 12% to 15% for shareholders. However, the stock also aims to increase its distribution by 5% to 9% each year as well.
Therefore, with Brookfield Infrastructure trading roughly 10% off its 52-week high and with its yield sitting just shy of 5%, there’s no question that it’s one of the best dividend stocks you can buy today.
One of the best dividend stocks to buy now in the real estate sector
In addition to Brookfield, another high-quality dividend stock to buy for your portfolio that’s both reliable and has significant growth potential is Morguard North American Residential REIT (TSX: MRG.UN).
Morguard is a residential REIT with some of its assets located in Canada. However, the majority of its properties are located in the United States.
This makes it an intriguing investment because it’s a well-diversified REIT with exposure to many different regions and states south of the border.
Having exposure to many different states as well as regions in Canada is important because it not only mitigates the risk of one or two regions underperforming but also gives Morguard exposure to other regions where fundamentals may be improving.
For example, in the third quarter of this year, occupancy declined slightly in Morguard’s U.S. portfolio, and its average monthly rents only increased somewhat. However, that was offset by strength in its Canadian portfolio, which saw average monthly rents climb by 6%, which caused its same-property net operating income (SPNOI) to climb by 5.3%.
It’s this diversification that makes Morguard such a reliable investment and one of the best dividend stocks you can buy. Plus, with the stock trading near the midpoint of its 52-week range, its yield has climbed to just shy of 4.5%.
Therefore, if you’re looking for a reliable dividend stock that can generate significant passive income and offers attractive long-term growth potential, Morguard is certainly a no-brainer investment.
