The 3 Best Dividend Stocks for High Yield in 2021

Theses top dividend stocks with reliable payouts and high yields can help investors build wealth and generate strong income streams in 2021.

| More on:

Income investors are constantly searching for the best TSX dividend stocks that offer above-average yield.

Top Canadian dividend stocks in the TSX Index pay reliable dividends supported by strong cash flow. Industry leaders, stocks with wide moats, and companies that provide essential products or services tend to be good picks.

Why Enbridge is one of the best dividend stocks for high yield

Enbridge (TSX:ENB)(NYSE:ENB) provides a 7.5% yield. The energy infrastructure giant raised the payout last year, and investors should see steady dividend hikes of 5-7% annually over the medium term.

Enbridge is best known for its oil pipelines. This division took a hit in 2020 but a return to near-capacity volumes should occur in 2021. In the meantime, Enbridge’s natural gas utility businesses, gas transmission, storage, and renewable energy assets continue to perform well.

The stock looks cheap near $45 per share. The 12-month high is $57, and a run to $55 wouldn’t be a surprise by the end of 2021. Long-term investors have enjoyed fantastic returns with Enbridge stock.

IGM Financial is an attractive high-yield stock pick for the next 20 years

IGM Financial (TSX:IGM) offers a 6.4% dividend yield. The company owns IG Wealth Management, Mackenzie Investments, and Investment Planning Counsel. IGM Financial also owns a 46% stake in fintech disruptor Wealthsimple.

These businesses help clients with all aspects of their wealth management and financial planning. In the coming years, analysts anticipate a wealth transfer of tidal-wave proportions. Recipients of decades’ worth of property and stock appreciation will increasingly turn to professionals to help them manage this wealth.

IGM Financial is part of the Power Corp family of companies. A move by the parent to privatize IGM Financial could result in a nice premium on the stock price. An IPO of Wealthsimple might also occur and provide a special dividend opportunity.

Why Russel Metals is a top high-yield stock to buy now

Russel Metals (TSX:RUS) is one of the largest metals distribution players in North America with steel distribution, metals service centres, and an energy products division.

The new administration in the United States should lead to less erratic tariff disputes in the next few years. At the same time, large fiscal stimulus efforts in the U.S. and Canada should support strong demand for Russel Metals products. The energy sector is also on the cusp of a rebound.

Russel Metals is a reliable dividend stock. The board held the payout steady during the past two downturns, so investors should be confident the distribution is safe.

At the current share price near $23, the stock provides a 6.5% yield. Investors who’d bought the stock at the March 2020 low have already doubled their money, but more upside should be on the way.

Russel Metals grows through acquisitions. It recently completed another deal, and ongoing takeovers should continue as the industry consolidates. At some point, Russel Metals itself might become a target.

The bottom line on top dividend stocks for high yield

Enbridge, IGM Financial, and Russel Metals are three of the best high-yield dividend stocks to consider in 2021. The distributions should be very safe, and investors get a short at huge increases in the stock prices by the end of the year.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

The Motley Fool owns shares of and recommends Enbridge. Fool contributor Andrew Walker owns shares of Power Corp and Enbridge.

More on Dividend Stocks

data analyze research
Dividend Stocks

3 Undervalued Stocks to Watch in November

Not all undervalued and discounted stocks are destined or poised to make a comeback soon, and a protracted timeline can…

Read more »

TFSA (Tax free savings account) acronym on wooden cubes on the background of stacks of coins
Dividend Stocks

The Perfect TFSA Stocks for Long-Term Growth

Two industry heavyweights are perfect stock holdings in a TFSA for long-term money growth.

Read more »

Make a choice, path to success, sign
Dividend Stocks

Is Fortis Stock a Buy for its Dividend Yield?

Fortis has increased the dividend for 51 consecutive years.

Read more »

Middle aged man drinks coffee
Dividend Stocks

Is Brookfield Stock a Buy, Sell, or Hold for 2025?

BAM stock recently jumped after beating earnings. But is it still a buy, or is it better to wait?

Read more »

Electricity transmission towers with orange glowing wires against night sky
Dividend Stocks

3 Top Canadian Utility Stocks to Buy in November

Are you looking for some top Canadian utility stocks to own? Here's a look at three must-have options for any…

Read more »

View of high rise corporate buildings in the financial district of Toronto, Canada
Dividend Stocks

Is First Capital REIT a Buy for its 4.8% Yield?

First Capital is a REIT that offers you a tasty dividend yield of 4.8%. Is this TSX dividend stock a…

Read more »

TFSA (Tax free savings account) acronym on wooden cubes on the background of stacks of coins
Dividend Stocks

TFSA Passive Income: 3 Stocks to Buy and Never Sell

Stocks like Fortis Inc (TSX:FTS) are worth holding long term.

Read more »

Electricity transmission towers with orange glowing wires against night sky
Dividend Stocks

Canadian Utility Stocks to Buy Now for Stable Returns

Given their regulated business, falling interest rates, and healthy growth prospects, these three Canadian utility stocks are ideal for earning…

Read more »