Chasing high-yield stocks is risky because they could be cash traps and leave you with less. Reliable and sustainable dividend payments should take precedence over larger payouts. You avoid sinking your portfolio, especially during uncertain market conditions.
Income-focused investors can counter today’s market volatility through defensive investing. Consider taking positions in Emera (TSX:EMA) and the North West Company (TSX:NWC). Both are the best dividend buys in May for their low-risk profiles and dividend stability.
Dividend grower
Emera has raised dividends for 18 consecutive years; the 19th is coming this year. The $18 billion company owns and operates cost-of-service, rate-regulated electric and natural gas utilities. Allied energy-related businesses include natural gas pipelines, marketing, and trading. Emera services approximately 2.6 million utility customers in Canada, the United States and the Caribbean.
Its President and CEO, Scott Balfour, said, “Emera’s strong start to 2025 provides further evidence of the high quality of our portfolio, providing further support and meaningful early progress towards delivering upon our average adjusted EPS growth guidance of 5% to 7% through 2027.” The forward annual dividend growth guidance is 1% to 2%.
In Q1 2025, total operating revenues increased 32.6% year-over-year to $2.7 billion, while net income climbed 167.1% to $601 million versus Q1 2024. Emera’s average net income in the last four years is $794.8 million. Around $700 million of the $3.4 billion capital budget in 2025 was deployed in the first quarter.
Emera will fund its $20 billion capital investment plan (2025 to 2029) primarily through internally generated funds. Significant utility investments aim to improve customer reliability, modernize critical infrastructure, and support market growth. EMA trades at $60.29 per share.
Defensive nature
The North West Company is a relatively safe investment option for income-seekers because of the defensive nature of consumer staples stocks. Moreover, the $2.6 billion company has a niche, if not a captured market. It serves underserved communities and remote regions in Canada, Alaska, and the Caribbean Islands.
In fiscal year 2024 (12 months ending January 31, 2025), sales and net earnings rose 4.2% and 6.7% year-over-year to $2.6 billion and $143.3 million. In Q4 2024, profit jumped 18.9% to $42.8 million from a year ago. NWC President and CEO, Dan McConnell, said the strong sales and earnings in the fourth quarter reflect solid performance across all the company banners.
NWC will launch new private-labels programs and target a full rollout by Q3 2025. Management expects the Next 100 operational initiatives, including introducing store-based inventory technology, to contribute to future earnings. McConnell notes the early momentum from NWC’s Next 100 program with new technologies improving on-shelf availability.
If you invest today, NWC trades at $55.39 per share and pays a decent 2.9% dividend. Regarding dividends, the company hasn’t missed a quarterly payment since 2011.
Top-performing sectors
The utilities and consumer staples sectors, where Emera and North West Company belong, are TSX’s top-performing sectors thus far in 2025. As of this writing, EMA and NWC investors enjoy a market-beating year-to-date gain of 15.1%-plus and 13.6%-plus, respectively.
