The TSX Index has many promising dividend stocks with higher yields, long histories of dividend increases, and fairly decent capital gains posted over the years. And as the markets sail higher ahead of August, such plays, I think, still seem cheap enough to consider buying (more) shares of. In this piece, we’ll have a look at a pair of dividend stocks that could be in for robust gains over the next 18 months.
Additionally, with well-covered and growing dividend payouts, I’d also look for a fairly generous dividend hike at some point over the next year. Indeed, you can have your higher dividend yields and dividend growth, too, at least if you know where to sail in the market waters!
Enbridge
Shares of pipeline behemoth Enbridge (TSX:ENB) have been a major gainer in the past year. Despite rising more than 20% in the last year, the dividend yield remains a bit above the 6% level. As quarters continue to impress, the midstream energy name appears to be a great way to generate utility-like cash flows and slightly less volatility than the broad TSX Index (0.86 beta). With Jefferies recently upgrading shares of ENB over its project pipeline and continued dominance, I’m inclined to be a net buyer of the stock on strength.
With quarterly earnings due in about a week, it’ll be a significant moment for shares as they hope to achieve a big breakout. I think the stock is a great buy going into the number, even though there may be a few headwinds that take away from the result. Either way, ENB stock is a name to hold for the long run for its dividend-growth profile and impressive management team, which has helped sail the ship through some pretty rough waves in the past five years.
While the stock is a bit on the pricier side, it is currently trading at 22.9 times trailing price to earnings (P/E), I still think the premier pipeline play is worth every bit of the historically swollen multiple. If you simply must have a yield over 6%, the name really stands out.
Telus
Telus (TSX:T) stock is a deeper value option for investors who want a higher yield and a bit more upside in a bull-case turnaround scenario. Indeed, Canada’s telecom industry has faced some notable pressures so far this year, but Telus has maintained the trust of investors by not only keeping its dividend intact but raising it by modest amounts in spite of the troubles going on behind the scenes.
Indeed, Telus’s managers are shareholder-friendly, and they deserve the benefit of the doubt as the firm looks to make the right moves to better position itself for the next three years.
The 7.4% yield is the star of the show, but it’s the potential upside in a turnaround that has me most enticed. Of course, there’s still execution risk with the name, but given the capabilities of management and the relative resilience of the firm, I’d not be afraid to buy the recent bounce off 2025 lows. I think it has room to run! Either way, the payout looks more than safe and perhaps subject to more growth down the line.
