The Bank of Canada slashed interest rates four times last year and could continue with its monetary easing initiatives. Amid falling interest rates, investing in high-yield dividend stocks would be an excellent strategy to earn a stable passive income. Investors could also benefit from capital gains. Historically, dividend stocks have beaten the broader equity markets while offering more stability. Against this backdrop, I believe the following three high-yielding dividend stocks would be excellent buys right now.
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Enbridge
Given its contracted midstream business, consistent dividend growth, and high dividend yield, I have picked Enbridge (TSX: ENB) as my first pick. The diversified energy company earns around 98% of its cash flows from regulated assets and long-term contracts, thus posting stable cash flows irrespective of the broader market conditions. Supported by these healthy cash flows, the company has been paying dividends for 69 years while raising its dividends for 30 years. It currently offers a quarterly dividend of $0.9425/share, translating into a forward yield of 6.12%.
Moreover, Enbridge has further strengthened its cash flows by acquiring three natural gas utility assets in the United States. Given their low-risk and regulated businesses, these acquisitions could lower Enbridge’s business risks while boosting its cash flows. Further, the company hopes to put around $6 billion of projects into service this year, driving its financials. Also, the company expects its cost optimization initiatives to deliver $200-$300 million of cost savings during the year.
Amid these growth initiatives, the company’s management expects its 2025 EBITDA (earnings before interest, tax, depreciation, and amortization) to be between $19.4-$20 billion. The midpoint of the guidance represents a 9.4% increase from the midpoint of the 2024 guidance. Considering its healthy growth prospects and stable cash flows, I believe Enbridge’s future dividend payouts to be safe.
Bank of Nova Scotia
Bank of Nova Scotia (TSX: BNS) is another Canadian stock with a long history of paying dividends. Given its diversified revenue streams, growing loan portfolio, and extensive geographical presence, the company generates healthy cash flows, thus allowing it to pay dividends uninterruptedly since 1833. Also, it has hiked its dividends at an annualized rate of 5.8% for the previous 10 years and currently offers a healthy forward yield of 5.51%.
Moreover, the financial services company has adopted a five-year plan to improve its profitability across its international banking operations. On the back of this plan, the company has entered into an agreement to transfer its Colombia, Costa Rica, and Panama businesses to Davivienda. Meanwhile, BNS will receive a 20% ownership stake in the combined entity. This transaction could improve BNS’s operational efficiency. Further, the company has also raised its stake in KeyCorp to 14.9%, which could support its business expansion in the United States. Along with these growth initiatives, the company’s improving operating metrics could boost its financials in the coming quarters, thus making it an excellent buy.
Telus
My final pick is Telus (TSX: T), one of three top telecom players in Canada. With telecommunication becoming an essential service in this digitally connected world, telecom companies, including Telus, enjoy healthy cash flows irrespective of market conditions. Supported by these healthy cash flows, the telco has returned around $26 billion to its shareholders since 2004, with $21 billion in dividends and $5 billion in share repurchases. Since May 2011, the company has raised its dividend 27 times and currently offers a juicy forward yield of 8.05%.
Meanwhile, Telus is expanding its 5G and fibre network infrastructure, which could continue to drive its customer base. Also, its solid customer retention rate and improving cost efficiency could boost its financials in the coming quarters. Moreover, its other growth segments, such as TELUS Health and TELUS Agriculture & Consumer Goods, also offer healthy growth prospects. Considering all these factors, I believe Telus’s future dividend payouts will be safe.
