Last week, the Bank of Canada slashed its benchmark interest rate by 25 basis points to 2.5% amid a weak labour market and easing inflation. Economists are predicting one more rate cut by the end of this year. With interest rates remaining low, investing in high-yield Canadian dividend stocks can be an effective way for investors to secure stable and attractive passive income. Against this backdrop, let’s examine the following two Canadian stocks that offer dividend yields exceeding 6%.
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Telus
Telecommunication companies generate stable cash flows from their subscription-based services, thereby allowing them to reward their shareholders with consistent dividend payouts. Therefore, my first pick is Telus (TSX:T), which has increased its dividend 28 times since launching its growth program in May 2011. The company’s current quarterly payout of $0.4163 per share equates to a forward yield of 7.58%.
Moreover, the demand for telecommunication services is increasing as businesses digitize their processes and the number of remote workers and learners grows. Meanwhile, Telus has planned to invest around $70 billion through 2029 to strengthen its 5G and broadband infrastructure, thereby expanding its customer base.
Furthermore, the Vancouver-based telecom company’s healthcare segment, Telus Health, has also sustained robust growth through a combination of strategic investments, product innovation, and the ongoing expansion of its sales channels. The company has also leveraged technological advancements and synergies to manage costs effectively and enhance its profitability.
Meanwhile, Telus is working to lower its net debt-to-EBITDA ratio to three by the end of 2027, which stood at 3.7 at the end of the second quarter. Earlier this month, the company sold 49.9% of its stake in the wireless tower business to La Caisse for $1.26 billion. The net proceeds from this transaction would help reduce its debt and lower its net debt-to-EBITDA ratio by 0.17. Considering its healthy growth prospects, improving financial position, and high yield, Telus would be an ideal buy to boost your passive income.
SmartCentres Real Estate Investment Trust
REITs (real estate investment trusts) should distribute 90% of their taxable income to shareholders, thereby making them attractive to income-focused investors. Therefore, I have chosen SmartCentres Real Estate Investment Trust (TSX:SRU.UN) as my second pick. The Toronto-based REIT owns and operates 197 mixed-use properties across Canada, with 90% of the population having at least one of its shopping centers within 10 kilometres.
Additionally, the company boasts a solid grocery-anchored tenant base, with over 95% of tenants having a national or regional presence, and 60% of these tenants offering essential services. Therefore, the REIT enjoys a healthy occupancy rate, which stood at 98.6% at the end of the second quarter of this year.
Moreover, the demand for retail space continues to rise, driven by population growth and persistently low vacancy rates. Elevated construction expenses and higher interest rates have constrained new supply, thereby intensifying demand. SmartCentres is capitalizing on rising demand by expanding its portfolio, with approvals in place for 58.9 million square feet of development and 0.8 million square feet already under construction. Supported by lease-up and renewal activities, these initiatives are poised to strengthen cash flows, positioning the REIT to maintain attractive dividend yields for its shareholders. Its current monthly dividend payout of $0.1542 per share translates into a forward yield of 6.96%.
