Dividend stocks can help provide safe ballast in your portfolio when the stock market is unpredictable. Not only do you earn a regular income that helps balance out your return profile, but quality dividend stocks tend to be less reactive to broader market swings.
If you are looking for safer dividend stocks to own, here are four to buy with $5,000 each for a total $20,000 investment.
Source: Getty Images
Fortis: A top safe dividend stock
Fortis (TSX:FTS) needs to be at the top of the list when it comes to safe stocks. Over the past 10 years, this stock has risen 91% for a 6% compounded annual growth rate (CAGR). However, when you add in dividends, Fortis has delivered a 179% total return for a 10.8% CAGR.
Fortis has nine utility businesses that are all regulated. Its focus on transmission and distribution places it as the backbone for the electric and heating/cooling grid. Its earnings are steady and predictable.
Fortis trades with a low beta, which means it has a lower correlation to the broader market. It is much less reactive than the market.
Fortis has delivered 52 years of consecutive dividend increases. It yields 3.2% today. This dividend stock continues to expect 5-7% dividend growth over the coming five years.
Pembina Pipeline
If you are looking for a larger dividend yield, Pembina Pipeline (TSX:PPL) is an attractive choice. Over the past 10 years, its stock is only up 76.3% (a 5.8% CAGR). Yet, add in dividends, and you end up with a 206% total return (an 11.9% CAGR).
Whether it be pipelines, gas processing, storage, or export terminals, it helps Western Canadian energy producers get their product to market. Over 85% of its income is contracted. That safe income more than backstops its dividend and operational expenditures.
This stock never stopped paying a dividend during the pandemic. In fact, since 2021, it has consecutively increased its dividend annually. Pembina stock yields 4.2% right now.
Intact Financial
Intact Financial (TSX:IFC) is another stock for safe dividend growth. This stock is up 200% in the past 10 years (a 11.6% CAGR). Add in dividends, and you are looking at a 278% total return (a 14.2% CAGR).
This is Canada’s largest property and casualty insurance company. It can earn leading margins and returns on equity because it can spread its costs over a large premium base.
Intact has raised its dividend for 21 consecutive years. It has grown its dividend by a 10% CAGR over the past 10 years. Today, this stock yields 2.15%
Loblaw: A top dividend stock for total returns
Loblaw Companies (TSX:L) is another safe dividend stock to buy with $5,000. This stock is up 246% in the past 10 years (a 13% CAGR). Add in dividends, and you would have a 400% total return (a 17.5% CAGR). That would make it the best-performing stock in this mix.
Loblaw is the largest grocery and pharmacy provider in Canada. Everybody needs groceries, medicine, and essential goods. It has a predictable demand that is amplified by an industry-leading rewards program and a mix of stores that cater to all types of consumers.
Loblaw has raised its dividend for 14 consecutive years. It only has a 1% dividend yield. However, it has actually been the top-performing stock, despite the lower yield. If you want a lower-risk, lower volatility investment, this is one of the top stocks to hold for the coming years.
