Dividend stocks are a must in a balanced portfolio as these companies stabilize your portfolios. Given their regular payouts, these companies are less prone to market volatility. Investors can reinvest the payouts to earn superior returns. Also, dividend stocks have historically outperformed non-dividend-paying stocks during extended periods. Against this backdrop, let’s look at two high-yielding Canadian dividend stocks you can buy and hold for the next 10 years.
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Enbridge
Enbridge (TSX: ENB) has been one of the top dividend stocks to have in your portfolios due to its impressive record of raising dividends and high dividend yield. The energy infrastructure company transports oil and natural gas through a tolling framework and long-term take-or-pay contracts, thus stabilizing its financials. Also, it sells the power generated from its renewable energy facilities through long-term PPAs (power-purchase agreements), delivering predictable revenue streams and reducing financial risks.
Amid its stable financials and healthy cash flows, Enbridge has been paying dividends uninterruptedly for 69 years. It has also raised its dividends for the previous 30 years. It currently pays a quarterly dividend of $0.9425/share, translating into a forward dividend yield of 6.22% as of the February 18th closing price.
Moreover, Enbridge continues to expand its asset base and has planned to invest around $8-$9 billion annually. Last year, the company acquired three natural gas utility assets in the United States. These acquisitions could boost its cash flows and lower its business risks. Amid these growth prospects, the company’s management expects its 2025 adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) to come between $19.4-$20 billion, with the midpoint representing a 5.9% year-over-year growth.
However, the Calgary-based energy company’s net debt-to-EBITDA multiple increased to five amid the acquisition of those three utility assets last year. With the growing contributions from these acquisitions to the company’s EBITDA, the company’s management is hopeful that the ratio will come down. Considering its healthy cash flows, solid growth prospects, and improving financial position, Enbridge could continue its dividend growth, thus making it an attractive buy at these levels.
Telus
The telecom sector has been under pressure over the last few years due to unfavourable policy changes and high interest rates. Amid the broader weakness, Telus (TSX: T) has lost around 38% of its stock value compared to its 2022 highs. The steep correction has dragged its NTM (next 12 months) price-to-sales multiple down to 1.6 while pushing its forward dividend yield to an attractive 7.46%.
Meanwhile, telecommunication services have become essential in this digitally connected world, thus expanding their demand. Telcos enjoy healthy cash flows due to their recurring revenue streams, allowing them to reward their shareholders with consistent dividend growth and share repurchases. Since 2004, Telus has paid $22 billion in dividends and repurchased shares worth $5.2 billion. It has also raised its dividends 27 times since May 2011.
Moreover, its expanding 5G and broadband infrastructure, new spectrum acquisitions, and attractive bundled offerings continue to increase its customer base, thus driving its financials. The company has also undertaken initiatives to improve its cost efficiency and effectiveness to drive profitability. Also, its Telus Health and Telus Agriculture & Consumer Goods segments are witnessing healthy growth amid strategic investments and strong execution. Considering all these factors, I believe Telus would be an excellent buy at these levels.
