Finding top dividend stocks to buy in any market can be a difficult task. However, with interest rates coming down, I’d argue that now is an excellent time for investors to consider adding exposure to many of the top higher-yield options in the market.
Those seeking passive income for their spending or retirement needs, and/or are looking to balance these income needs with the potential for gains down the road, may be better-suited to buying dividend stocks over other fixed income assets such as bonds.
For those in this boat, here are three high-yield Canadian dividend stocks I think are solid buys right now.
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Dream Industrial REIT
For investors looking at putting some of their hard-earned capital to work in the real estate sector, I continue to think industrial real estate investment trusts (REITs) are the way to go. Right now, my top pick of this group happens to be Canada-based Dream Industrial REIT (TSX: DIR.UN).
As the chart above shows, Dream Industrial has been on a roller coaster ride of late. In fact, the company’s stock price has traded within a relatively orderly band for the past five years.
With shares of Dream Industrial now trading near the mid-point of the band, many investors may question where this stock is likely to be headed from here. Well, I think the company’s dividend yield of 5.8% is likely to provide somewhat of a floor, and I’d recommend investors look at how this yield has trended over time.
With interest rates more likely than not to head lower (particularly in the Canadian market) in the coming years, I think real estate beneficiaries like Dream Industrial can benefit to an outsized degree. For those who agree, this stock looks like a solid buy here.
Enbridge
Few lists of high-yield Canadian dividend stocks to buy should exclude Enbridge (TSX: ENB), in my view.
This Canadian pipeline giant currently provides a dividend yield of 5.6%, and this yield comes at a time when the company’s stock price is absolutely skyrocketing.
In fact, over the past five years, Enbridge stock has more than doubled. This move is remarkable, considering the relatively steady earnings and cash flow profile Enbridge provides.
I think the market is banking on additional infrastructure projects getting approved, given the openness to such projects from both the new Canadian and American administrations. Those who believe these trends are likely to prevail in the coming years and want to own a piece of the energy independence narrative can sleep well at night owning Enbridge, in my view.
Whitecap Resources
Oil prices are continuing to fluctuate, providing plenty of volatility for a sector that’s benefited from robust pricing for some time now. That said, I still think Whitecap Resources (TSX: WCP) and its 6.3% yield at the time of writing make sense to leg into.
Now, Whitecap’s dividend yield has come down meaningfully in recent months, as its share price has continued to trend higher. But at a level that remains above 6%, I think this yield is not only meaningful enough for those seeking reasonable passive income in retirement, but also suggestive of very strong fundamentals underneath the surface that investors should consider.
Whitecap has been able to utilize its extra free cash flow generated in recent years to both buy back shares and increase its dividend. As the company’s operational efficiency continues to improve and new optimized programs and high-quality assets result in greater cash flows over time, I think these trends will continue.
For those looking for an energy producer trading at 10 times earnings with a 6%-plus dividend yield, this is the first place I’d look.
