Written by Sneha Nahata at The Motley Fool Canada
Investors aiming for consistent income often find value in dividend stocks with high yields. However, one must exercise caution when dealing with high-yield dividend stocks, as they usually entail heightened risks, and their payouts may lack sustainability over the long haul.
Therefore, income investors should conduct thorough research on the financial well-being of the companies they are interested in and diversify their portfolios to spread risk. A prudent strategy involves concentrating on shares of fundamentally strong firms with a proven history of consistent dividend payments and growth. Notably, companies with a track record of increasing their dividends tend to be more dependable. Additionally, investors could consider companies with a growing earnings base, which will support future dividend payouts.
Given this context, Enbridge (TSX:ENB), TC Energy (TSX:TRP), and Telus (TSX:T) emerge as three noteworthy high-yield stocks to consider. These firms are focused on elevating their shareholders’ value by bolstering dividend distributions. Furthermore, they present an attractive yield exceeding 6%. Let’s delve into the factors to understand why these companies are dependable high-yield income stocks.
Enbridge stands out as a reliable choice for income investors, and there are solid reasons for that. The energy infrastructure company boasts of an impressive history of dividend payments, which spans over 68 years. At the same time, it has uninterruptedly increased its dividend for 28 years. This makes Enbridge an income investors’ best friend.
The company pays a quarterly dividend of $0.887 per share, equating to an impressive yield of 7.6% based on its closing price of $46.54 on September 22.
Investors should note that Enbridge consistently generates solid distributable cash flows that enable it to maintain and grow its payouts regardless of market conditions. Further, the resilience of its dividend payouts is supported by its regulated cost-of-service tolling agreements, low-risk contracts, and inflation-protected earnings that drive its distributable cash flows. Also, its dual growth strategy of continued investments in conventional assets and renewables positions it well to meet long-term energy demands and deliver solid earnings and dividends.
Like Enbridge, TC Energy presents a reliable opportunity for investors seeking worry-free high yields. This Dividend Aristocrat has consistently boosted its annual dividend for 23 consecutive years. Furthermore, it currently offers an attractive yield of 7.36%, calculated based on its closing price of $49.06 as of September 22.
TC Energy recently announced a strategic decision to initiate the spinoff of its Liquids Pipelines business, paving the way for the emergence of two distinct companies to capitalize on energy transition opportunities, unlock incremental growth, and enhance efficiencies.
The initial total dividends from these two entities will match the company’s current annual dividend. Furthermore, the company intends to steadily increase its dividend in the years ahead. With its regulated and contracted asset base and focus on renewables, TC Energy emerges as a solid stock to start a growing passive-income stream and earn a high yield.
Telus is popular for regularly bolstering its shareholders’ returns through higher dividend payments. The telecom giant’s ability to deliver profitable growth enables it to return substantial cash to its investors.
It’s worth highlighting that Telus distributed dividends of over $1 billion in the initial half of 2023. Furthermore, over the period since 2004, it has returned an impressive $18.6 billion to its shareholders via dividend payments. In line with its multi-year dividend-growth strategy, Telus has set its sights on achieving an annual dividend growth rate of 7-10% through 2025. Furthermore, the company presently offers a high yield of 6.4%.
Telus’s attractive dividend yield, growing customer base, reduced churn rate, and focus on advancing its PureFibre infrastructure and 5G services bode well for future growth and dividend disbursements.
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