Dividend investing with high-quality and reliable income-generating assets is one of the best ways to get stable returns during volatile market conditions. Inflationary conditions keep getting worrisome with each passing month. The Bank of Canada (BoC) will likely introduce interest rate hikes soon to bring the inflation rates down a notch to more reasonable levels.
Combined with the geopolitical tensions and persistent supply chain issues, it seems likely that the instability in the market will not die down soon. Are you looking for high-quality dividend stocks that could provide you with stable returns during such harsh economic environments?
If yes, then you might want to take a closer look at these two high-quality dividend stocks that could be suitable for this purpose.
Keyera
Keyera (TSX:KEY) is a $6.51 billion market capitalization midstream oil and gas company, one of the biggest in Canada. The company plays a crucial role in the energy sector by servicing oil and gas producers in Western Canada to provide them with transportation of natural gas liquids throughout North America.
Investors seeking income-generating assets could consider investing in its shares. The company has a strong balance sheet and the overall financial stability necessary to deliver reliable shareholder returns through dividend payouts. Its proven business model allows Keyera to fund its growing shareholder dividends comfortably.
At writing, Keyera stock trades for $29.69 per share, and it boasts a juicy 6.47% dividend yield. The company’s operational cash flows declined in 2021, because of more expenses to fund its inventory, but it boasts a strong long-term growth outlook. It has introduced dividend hikes at a rate of almost 25% a year for the last five years, and it looks well positioned to continue delivering dividend hikes in the coming years.
Enbridge
Enbridge (TSX:ENB)(NYSE:ENB) is another giant in the North American energy industry that you could consider a safe dividend stock to own. The $110.05 billion market capitalization company boasts an expansive network of pipelines. It uses its portfolio to transport a considerable portion of traditional energy commodities throughout North America.
At writing, Enbridge stock trades for $54.76 per share, and it boasts a 6.28% dividend yield at current levels. The company has increased its shareholder dividends annually by about 58% in the last five years, despite challenges posed by the pandemic for the broader energy industry.
It is a high-quality company that has been putting up a stellar performance on the stock market, despite the economic environment. Investing in its shares could provide you with a portion of the stable passive income you seek.
Foolish takeaway
Companies with strong balance sheets, time-tested business models that can generate strong cash flows, and a reputation to reward investors with handsome dividend payouts could be an ideal hedge against the impact of volatility on your investment returns.
Keyera stock and Enbridge stock are two such TSX stocks that you could consider adding to your portfolio for this purpose.
