Escalating tensions in the Middle East and renewed inflationary concerns stemming from higher oil prices have weighed on investor sentiment, contributing to heightened volatility across equity markets. Against this uncertain backdrop, investors may benefit from adding high-quality dividend stocks to their portfolios. Companies with well-established businesses, resilient cash flows, and consistent dividend track records can provide stability while continuing to generate income for shareholders. Their relatively defensive operations may also make them less vulnerable to economic cycles and broader market fluctuations.
With these qualities in mind, let’s take a closer look at two quality dividend stocks that could strengthen an income-focused portfolio in the current environment.
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Enbridge
Enbridge (TSX: ENB) remains an attractive option for income-seeking investors, thanks to its contracted business model, dependable cash flows, consistent dividend growth, and solid long-term growth prospects. The diversified energy infrastructure giant operates more than 200 income-producing assets, with approximately 98% of its earnings generated from regulated assets and long-term take-or-pay contracts. This highly predictable revenue base limits the company’s exposure to economic cycles and commodity price volatility, supporting resilient cash flows that have enabled Enbridge to pay dividends for more than 70 years. The company has also increased its dividend for 31 consecutive years and currently offers a forward yield of approximately 5.6%.
Looking ahead, rising oil and natural gas production and consumption across North America should continue to drive demand for Enbridge’s extensive energy infrastructure. Against this favourable backdrop, the company has identified approximately $50 billion in growth opportunities and plans to invest $10 billion to $11 billion annually to advance these projects. These investments could support annualized earnings and cash-flow growth of approximately 5% through the end of the decade.
Enbridge also plans to return approximately $40 billion to $45 billion to shareholders over the next five years, underscoring management’s confidence in the company’s long-term cash-flow generation. With a defensive business model, an attractive yield, and a substantial growth pipeline, Enbridge remains well positioned to deliver sustainable income and long-term value to shareholders.
Bank of Nova Scotia
Another dividend stock that could appeal to income-seeking investors is Bank of Nova Scotia (TSX: BNS), which provides a broad range of financial services across multiple markets. Its diversified business and revenue streams support relatively stable earnings and cash flows across economic cycles, while its exceptional dividend history dates back to 1833. Over the past decade, Scotiabank has increased its dividend at an annualized rate of approximately 4.5%. It currently pays a quarterly dividend of $1.14 per share, for a forward yield of about 3.6%.
Scotiabank is also repositioning its business to strengthen its higher-margin North American operations while reducing its exposure to less-profitable and riskier Latin American markets. This strategic shift could improve the quality and stability of its earnings over time. A higher interest-rate environment could also support the bank’s lending operations by helping sustain healthy net interest margins.
The bank is also returning capital to shareholders through share repurchases. In April, it announced a new program to repurchase up to 15 million shares over the following 12 months. The program would reduce shares outstanding by approximately 1.2%, potentially enhancing per-share earnings and shareholder value.
With its attractive dividend yield, longstanding payout history, strategic repositioning, and ongoing capital returns, Scotiabank could be a compelling addition to a diversified income-focused portfolio.
