There’s a reason investors get nervous when a company cuts its dividend, as such a move often reflects deeper issues behind the scenes. With BCE (TSX: BCE), the decision to reduce its dividend to $1.75 per share and scrap the 2% discount under its dividend reinvestment plan program looked like more than just a payout adjustment. I took it as a reminder that even the biggest companies can sometimes stumble when faced with economic pressures and rising competition.
Sure, BCE’s management justified the cut by saying it would create flexibility and strengthen the balance sheet, but most income investors usually want dividend stability more than flexibility. This was especially tough news for those who’ve relied on BCE as a stable income source. And that move raised a simple but important question – why settle for less when other Canadian dividend stocks are clearly delivering more stable income?
In this article, I’ll talk about two top dividend stocks I now like better than BCE for long-term income.
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Canadian Utilities stock
Let’s start with Canadian Utilities (TSX: CU), a dependable company that offers dividend stability with a strong pipeline of future growth. This Calgary-based company is a majority-owned subsidiary of ATCO (TSX: ACO.X). It operates in the regulated utility space, covering electricity and natural gas transmission and distribution through its ATCO Energy Systems division. CU also has a growing presence in renewables, energy storage, and low-emission fuel development through ATCO EnPower, and owns major infrastructure assets in Australia.
After gaining 16% in value over the last eight months, CU stock is currently trading at $38.51 per share with a market cap of just over $7.9 billion. The company rewards investors with quarterly dividends and offers an annualized yield of nearly 4.8%.
Despite the ongoing macroeconomic uncertainties, CU’s earnings have been holding up well. In the latest quarter ended in June, the company’s adjusted earnings rose 5% YoY (year-over-year) to come in at $0.45 per share. Similarly, its adjusted quarterly net profit also went up slightly on a YoY basis to $121 million as efficiency and stable demand continue to drive its core business forward.
Where Canadian Utilities really separates itself is in its long-term plans as it continues to expand renewable energy assets, including hydrogen and carbon capture projects. Meanwhile, the company is also involved in sustainable water and clean fuel solutions.
In short, it’s a regulated utility with a clean balance sheet, a stable yield, and a roadmap that aligns with where the energy sector is heading. That’s a much stronger mix than what BCE offers right now.
Keyera stock
Keyera (TSX: KEY) could be another top stock delivering better dividend value than BCE. If you don’t know it already, it’s a midstream energy firm with a well-diversified business model. The company mainly focuses on natural gas gathering and processing, runs major liquids infrastructure, and markets high-demand products like propane, butane, and condensates.
Keyera stock currently trades at $46.33 per share after climbing 10% over the last year, giving it a market cap of around $13 billion. At this market price, it offers an annualized dividend yield of 4.7%.
Lower prices in some product categories drove Keyera’s second-quarter revenue down by 6% YoY to $1.6 billion. Nevertheless, its adjusted quarterly net profit of $126.5 million exceeded Bay Street analyst expectations of $94.1 million by a huge margin.
From increasing iso-octane production to investing in long-term energy transportation corridors, Keyera is focusing on what it does best and doing it profitably. That could be one of the key reasons why its stock has jumped more than 125% the last five years, which is remarkable for a dividend stock in the energy space.
Moreover, its well-covered dividend, solid assets, and a measured growth plan make Keyera a strong pick for anyone who wants reliable income for years to come.
