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Passive-Income Investing: 3 Big Dividend Stocks to Buy Now

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data analytics, chart and graph icons with female hands typing on laptop in background

Written by Kay Ng at The Motley Fool Canada

Passive-income investing can be set up by building a safe dividend stock portfolio. Here are some big dividend stocks you can consider buying now for income. They serve as way better passive-income investments than low-interest-yielding investments if you have a long-term investment horizon and can withstand some volatility.

NorthWest Healthcare Properties REIT pays a 5.9% dividend

NorthWest Healthcare Properties REIT (TSX:NWH.UN) allows retail investors to gain exposure to a healthcare real estate investment trust (REIT) with global scale. The healthcare REIT owns 192 income-producing properties across 16.2 million square feet of gross leasable area located throughout major cities in Canada, Brazil, Europe, Australia, and New Zealand.

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NorthWest Healthcare partners with leading operators and collects rental income from them. The REIT has a long weighted average lease expiry of about 14 years and a high portfolio occupancy of 97% to make its cash flow generation very stable. Don’t worry about the recent spike in inflation around the world. The REIT’s cash flow largely benefits from inflation, as 76% of its rents are indexed to inflation.

The steady rise of about 18% over the last year is supported by the REIT raising its net asset value per unit (NAVPU) by almost 11% year over year to $13.60. Continued execution of its growth strategy can lead to a higher NAVPU that will drive a steadily higher stock price. Currently, the big dividend stock offers a solid yield of close to 5.9%.

TC Energy yields 5.7%

TC Energy (TSX:TRP)(NYSE:TRP) is another big dividend stock that has price appreciation potential. It pays a juicy yield of about 5.7%. Oil and gas prices are volatile, but TC Energy’s cash flow has proven to be reliable through market cycles.

The large-cap energy infrastructure company is a Canadian Dividend Aristocrat with a track record of increasing its dividends. Its 10-year dividend-growth rate is 7.3%. With a commercially secured $22 billion capital program through 2025 to drive growth, it should be a breeze for TC Energy to continue raising its payout at a similar rate.

Analysts who are more bullish on natural gas infrastructure particularly favour TC Energy over its peer, Enbridge. Specifically, TC Energy generates about 77% of its cash flow from natural gas infrastructure and 17% from liquids infrastructure. The big dividend stock trades at a discount of about 10% from its fair value, which makes it a prime passive-income investment.

Manulife Financial pays a 5.3% dividend

You’re in for a treat with this last big-dividend-stock idea. Although Manulife (TSX:MFC)(NYSE:MFC) pays the smallest yield of the three dividend stocks (mind you, it’s still a big dividend), it offers the best value. The life and health insurance company trades at about 7.6 times this year’s estimated earnings, while analysts forecast an earnings-per-share (EPS) growth rate of about 12% over the next three to five years. Even if the company only increases its EPS by about 8% over this period, it would still be a cheap stock. Importantly, its 5.3% big dividend is protected by a sustainable payout ratio of approximately 36%.

The post Passive-Income Investing: 3 Big Dividend Stocks to Buy Now appeared first on The Motley Fool Canada.

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The Motley Fool recommends Enbridge and NORTHWEST HEALTHCARE PPTYS REIT UNITS. Fool contributor Kay Ng owns shares of Manulife.

2021