Income Investing: 2 TSX Behemoths to Buy

When it comes to income investing, stability is a key trait to look for in a stock. These TSX giants have solid yields on offer.

Jared Seguin

Published March 5, 2021 8:00 pm EST

For investors focused on income investing, the stability of a dividend is paramount. While massive yields are attractive, they’re not useful to investors if they’re up for a cut.

That is, it’s hard to build a stream of dependable income with uncertain dividend sources. That’s why many income investors turn to certain blue-chip TSX stocks with amazingly stable dividends.

While they may not offer the largest yields on paper, these stocks typically offer terrific dividend growth over time and unmatched reliability. Usually, these are blue-chip stocks in non-cyclical sectors with a diverse range of revenue sources.

Today, we’ll look at two such TSX behemoths ideal for income investing.

Fortis

Fortis (TSX:FTS)(NYSE:FTS) is a large and well-diversified utility holding company based out of Canada. It has a range of services it provides to customers across the Caribbean and Central America as well as North America.

Fortis has long been a favourite of Canadian investors focused on dividend investing. It has a great track record for stability, and it’s always been committed to growing its dividend over time.

This is possible due to how Fortis conducts business. It provides its utility services largely through thoroughly regulated contracts. This means its revenue streams are very reliable and predictable.

The result is a rock-solid dividend ideal for income investing. Since Fortis offers such essential services in a very steady manner, investors can bank on its dividend.

As of this writing, FTS is trading at $50.18 and yielding 4.03%. While it’s not the most eye-popping yield, its reliability is a huge positive for income investing.

It’s likely not going to give investors some juicy annual returns in any given year, but for dividend investors it’s a solid and safe pick.

Scotiabank

Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) is a massive Canadian banking stock with a growing presence on an international scale. It remains focused on finding ways to drive growth with exposure to new markets and sectors.

For the purposes of income investing, BNS is an attractive bank pick. That’s because it typically offers a large yield relative to its peers with strong underlying financials to support it.

As of this writing, it’s trading at $77.42 and yielding 4.65%. While it’s no secret that many stocks have faced an uphill battle recently, BNS isn’t showing signs of cracking.

In fact, its dividend payout ratio is still only 67.67%. That figure is higher than what BNS typically might carry, but it’s still not anywhere near the danger zone as far as jeopardizing the dividend.

BNS also has access to plenty of liquidity and a strong support cushion in place. For investors looking to add a major bank to their income investing plan, BNS is a solid pick.

Like with FTS, it typically won’t wow its investors with massive jumps in the short run, but over time it has solid growth prospects and a reliable yield.