Investing in high-yield dividend stocks can power up your portfolio’s income potential. However, investors should exercise caution, as high yields may not be sustainable in the long run. Therefore, investors could consider adding high-yield Canadian stocks with fundamentally strong business, growing earnings, and sustainable payouts. Against this backdrop, here are three high-yield dividend stars worth considering.
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High-yield stock #1
Telus (TSX: T) is a compelling, high-yield dividend stock that can power up your portfolio. Its stellar dividend growth history, sustainable payout ratio, and attractive yield make it a must-have stock for generating worry-free passive income in all market conditions. Currently, the leading wireless service provider pays a quarterly dividend of $0.402 per share, which equates to a high yield of about 7.9%.
While Telus offers a high yield, its payouts are sustainable, considering the company’s ability to grow profitably. Telus hiked its dividend 27 times since 2011 and returned more than $21 billion to its shareholders as dividends since 2004. Moreover, the company could continue to grow its dividend by 7–10% under its sustainable multi-year dividend-growth program.
Telus’s focus on revenue diversification and expansion into digital services bodes well for future growth and will support its future payouts. The telecom company continues to expand its user base profitably while maintaining a low churn rate. In addition, Telus will likely benefit from investing in its network, enhancing coverage and reliability through spectrum acquisitions and infrastructure upgrades. Overall, Telus is poised to enhance its shareholder value through higher dividend payments.
High-yield stock #2
Brookfield Renewable Partners (TSX: BEP.UN) is another reliable dividend stock offering high yield. Its highly diversified portfolio of renewable power assets, large installed capacity, and long-term, inflation-linked contractual arrangements position it well to generate solid cash flows, which enables it to pay higher dividends.
For instance, the renewable energy company has consistently raised its dividends by at least 5% for the past 14 years. Further, Brookfield Renewable is on track to increase future dividends at a mid- to high single-digit rate. Currently, it offers a high yield of about 7.3%.
Brookfield Renewable Partners will likely benefit from the rising demand for clean energy, driven by the broader push toward electrification and the expansion of data centres. Brookfield’s strategic acquisitions will also help strengthen its position in the clean energy segment. Furthermore, the company’s extensive development pipeline and strong liquidity augur well for growth and will support its payouts.
High-yield stock #3
Canadian investors could consider adding Northwest Healthcare Properties REIT (TSX:NWH.UN) to their portfolios. This real estate investment trust (REIT) distributes monthly dividends and offers a high yield of approximately 7.3%. Notably, Northwest Healthcare owns and operates a resilient portfolio of healthcare properties, which generates steady same-property net operating income and supports its payouts.
The REIT benefits from its high-quality tenant base, which includes large hospital operators or healthcare practitioners (supported by government funding). Moreover, its properties have a high occupancy rate of about 96%. In addition, Northwest Healthcare’s high rent collection rate and inflation-indexed leases augur well for growth.
Looking ahead, Northwest will benefit from the growing demand for healthcare infrastructure, driven by aging populations and rising urban migration. Additionally, Northwest Healthcare’s strategic initiatives, such as planned asset sales and debt reduction, and its focus on optimizing its balance sheet will strengthen its financial position and support future dividend payouts.
