2 Top High-Yield Dividend Stocks to Buy in Canada

Yield-hungry investors can’t go wrong if they buy the Enbridge stock and Manulife Financial stock today. Besides the attractive dividend yields, both are Dividend Aristocrats that can deliver lasting income streams.

| More on:

Investment opportunities on the stock market change every month. Thus far, in 2021, TSX’s performance is better than expected. There’s growing optimism the index can sustain its upward trajectory given the high levels of COVID-19 vaccine uptake across Canada.

For dividend investors, the search continues for suitable and reliable income stocks. However, if you’re chasing high yields, the top choices to buy today are Enbridge (TSX:ENB)(NYSE:ENB) and Manulife Financial (TSX:MFC)(NYSE:MFC). Besides the attractive yields, both are Dividend Aristocrats.

Low-risk and resilient business model

Enbridge is the cream of the crop. The premier energy stock is the perennial choice of yield-hungry investors, Tax-Free Savings Account (TFSA) users, and retirees. The $82.92 billion energy infrastructure company pays an over-the-top 6.98% dividend. Based on analysts’ forecast, the current share price of $40.71 could rise to $49.

The company delivers positive financial results almost every year because of strong operational performance, highly contracted utility assets, and stable cash flows. Expect a significant cash flow growth in 2022, as $10 billion of Enbridge’s $17 billion capital program will be placed into service this year.

Enbridge estimates a $2 billion incremental EBITDA annually from the said capital program. Its president and CEO Al Monaco stresses that Enbridge has great visibility to achieve between 5% and 7% cash flow growth through 2023. With a growing dividend, the energy stock is indeed a very attractive value proposition for shareholders.

Several projects in the renewable space are underway. Enbridge aims to build a portfolio of capital-efficient, low-carbon energy projects. Their commercial frameworks and returns align with the low-risk business model. Currently, a hydrogen-blending pilot project and four renewable natural gas projects are under construction.

Over the last 45.5 years, Enbridge’s total return is 46,281.04% (14.45% CAGR). Meanwhile, the blue-chip stock’s year-to-date return is 25.85%. The energy sector is the best-performing sector in 2021, following the slump in 2020.

Global strength and business diversity

Manulife, one of the world’s largest life insurers, is a household name. Apart from insurance, the $47.75 billion company also provides wealth and asset management solutions and financial advice. At $24.59 per share, the corresponding dividend yield is 4.53%.

The top-tier insurance stock should appeal to value investors as well, because of its solid earnings outlook compared to others in the industry. Manulife’s growth drivers are its Asia and Global Wealth & Asset Management business segments. Currently, over 80% of the assets are fixed assets. Moreover, about 98% are investment grade.

In Q1 2021 (quarter ended March 31, 2021), core earnings grew 67% year over year, although the $783 million in net income was a $513 million drop versus Q1 2020. According to Manulife president and CEO Roy Gori, the higher risk-free rates and a steepening yield curve within North America are why net income declined during the quarter.

Nevertheless, Gori said the operating results were very strong in Q1 2021 due to the double-digit growth in core earnings across the operating segments. He cited the global strength of Manulife and the diversity of its business for the impressive quarterly results.

Notably, Manulife’s digital transformation is progressing well. Auto-underwriting is now 72%, while straight-through-processing and eClaims are at 81% and 92%, respectively.

Income streams for decades

Enbridge and Manulife are yours for the taking in 2021. You have two top-tier high yielders that could provide steady income streams for decades.

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.

Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Enbridge.

More on Dividend Stocks

Train cars pass over trestle bridge in the mountains
Dividend Stocks

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

Can CNR stock continue its long-term outperformance into 2025 and beyond? Let's explore whether now is a good time to…

Read more »

coins jump into piggy bank
Dividend Stocks

The Smartest Dividend Stocks to Buy With $500 Right Now

These top dividend stocks both offer attractive yields and trade off their highs, making them two of the best to…

Read more »

Middle aged man drinks coffee
Dividend Stocks

Here’s the Average TFSA Balance at Age 35 in Canada

At age 35, it might not seem like you need to be thinking about your future cash flow. But ideally,…

Read more »

ETF stands for Exchange Traded Fund
Dividend Stocks

How to Invest Your $7,000 TFSA Contribution in 2024

Here's how I would prioritize a $7,000 TFSA contribution for growth and income.

Read more »

a man relaxes with his feet on a pile of books
Dividend Stocks

CPP Pensioners: Watch for These Important Updates

The CPP is an excellent tool for retirees, but be sure to stay on top of important updates like these.

Read more »

Technology
Dividend Stocks

TFSA Investors: 3 Dividend Stocks I’d Buy and Hold Forever

These TSX dividend stocks are likely to help TFSA investors earn steady and growing passive income for decades.

Read more »

four people hold happy emoji masks
Dividend Stocks

Love Dividend Growth? Check Out These 2 Income-Boosting Stocks

National Bank of Canada (TSX:NA) and another Canadian dividend-growth stock are looking like a bargain going into December 2024.

Read more »

An investor uses a tablet
Dividend Stocks

A Dividend Giant I’d Buy Over Enbridge Stock Right Now

Enbridge stock may seem like the best of the best in terms of dividends, but honestly this one is far…

Read more »