If you like dividends, you have plenty of Canadian stocks to choose from. The one danger is that investors could prefer dividend yield over the quality of a business (or the dividend).
A 7% or higher dividend yield is no good if you lose a large piece of your capital from the stock declining. Likewise, a large dividend yield is no good if it is cut by half or halted completely.
Luckily, there are plenty of options for safe, decent yields and modest capital growth as well. Here are four Canadian stocks with yields over 4% to buy today.
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A Canadian pipeline stock
Pembina Pipeline (TSX: PPL) offers investors an attractive combination of income, value, safety, and modest growth. Pembina has built a great diversified network of energy infrastructure in Western Canada. For many crude and gas producers, it is the only way they can get their production to market.
Pembina is a very well-run company. It has a strong environmental and safety record. Likewise, it has a history of completing projects on time and under budget. The company generates strong free cash flows from its contracted businesses. That widely supports its 5.6% dividend yield.
Pembina has a sector-leading balance sheet. That provides it flexibility to build one of Canada’s few LNG terminals in British Columbia. Once online, that project could provide attractive earnings growth ahead for investors.
An energy stock
Canadian Natural Resources (TSX: CNQ) is another Canadian stock for growth and income. With 1.5 billion barrels of energy equivalent under production, it is the largest energy producer in the country.
With scale, it is the master of low-cost energy. Having some of the lowest-cost production allows it to be resilient through almost any energy environment. It can be opportunistic through acquisitions during downturns like the present. Even though prices have been down in the past few years, the company still generates a tonne of cash.
Its cost-efficient mindset has helped produce 25 years of consecutive dividend increases. Today, this Canadian stock yields 5.4%. With over 30 years of energy reserves, there is still lots of cash set to land in shareholders’ pockets over the years to come.
A Canadian real estate stock
Speaking about resilience, First Capital Real Estate Investment Trust (TSX: FCR.UN) is an interesting Canadian dividend stock. It owns some of the best retail properties in Canada. Its properties are urban-focused and that is where tenants and customers want to be.
Consequently, First Cap has consistently enjoyed 3–5% annual rental rate growth for years. It has strong occupancy and a quickly improving balance sheet from selling off non-core assets.
The stock is cheap. FCR.UN trades at a severe discount to its private market value. Its 4.9% dividend yield is very safe. Hold this stock for the income while the market finally appreciates the quality of its assets.
A U.S. real estate play
BSR Real Estate Investment Trust (TSX:HOM.UN) is another unique way to earn a yield over 4%. This is a great Canadian stock if you want residential real estate exposure outside of Canada.
BSR owns a portfolio of quality garden-style communities in the southeastern U.S. (mostly Texas). Texas is leading America in economic and population growth. As a result, residential demand is very high, despite a recent surge in supply. Rental rates are expected to keep rising in its core markets.
BSR has been a smart capital allocator. It has recycled older properties for higher-quality units with great rental growth potential. Despite great management, this stock trades at a discount to U.S. peers and to private market value. Collect a 4.3% distribution while you wait for the sun to shine on this stock again.
