Dividend stocks are one of the smartest ways to create wealth in the long term. By investing in dividend-paying stocks, one can generate returns in two ways: dividends and capital appreciation. As top dividend-paying companies generally have well-established businesses and a growing earnings base, they generate steady capital gains in the long term. Further, the reinvestment of dividends allows investors to accumulate more shares and create wealth in the long term.
With this background, let’s zoom in on three high-yield Canadian stocks that can help you get rich over time.
Enbridge
Enbridge (TSX:ENB) is a must-have dividend stock, and there are solid reasons behind that. Besides offering a lucrative yield of 6.7% (based on its closing price of $53.14 on May 10), the company has a resilient business that consistently delivers steady growth.
Enbridge owns extensive midstream assets and transports oil and gas. In addition, Enbridge has interests in renewable energy facilities. Thanks to the solid asset base and a high utilization rate, Enbridge increased its dividend at an average annualized growth rate of 10% in the last 28%. Thus, investing in Enbridge helps you create an income portfolio that grows with you.
The energy company has over 40 diverse income streams. Meanwhile, its investments in conventional and renewable energy assets position Enbridge well to capitalize on the long-term energy demand and deliver solid growth. Enbridge’s multi-billion-dollar secured capital program adds visibility over future cash flows, and new assets placed into service will likely support near-term financials.
Overall, its resilient business, steady growth, healthy long-term prospects, and high yield make it a solid dividend stock to get rich in the long term.
Toronto-Dominion Bank
With a stellar dividend payment and growth history, Toronto-Dominion Bank (TSX:TD) is another solid stock. The financial services giant has been paying dividend for 166 years. Impressively, it has increased its annual dividend by a compound annual growth rate (CAGR) of 11% since 1995.
Its diversified revenue streams, ability to drive loans and deposits, and operating leverage have led to a steady increase in its earnings and supported higher payouts. For instance, Toronto-Dominion Bank’s adjusted earnings have grown at a CAGR of approximately 9% in the last five years.
Besides organic growth, Toronto-Dominion Bank benefits from its accretive acquisitions that expand its addressable market and strengthen its competitive positioning. Its strong balance sheet, ability to acquire companies, a sustainable payout ratio of 40-50%, attractive yield of 4.68%, and growing dividend make it a solid long-term bet.
Telus
Telus (TSX:T) are another high-yield dividend stock worth investing in. Its ability to consistently deliver profitable growth and opportunities from the expansion of 5G services positions it well to deliver shareholder return.
Telus has been enhancing its shareholders’ return through increased dividend payments and share repurchases. Telus has returned about $18 billion in the form of dividends since 2004. Further, the company targets to increase its dividend by 7-10% per year through its multi-year dividend-growth program. Currently, it offers a high yield of 5.2%.
While Telus offers a reliable and growing income, its continued investments in network infrastructure, growing subscriber base, and lower churn rate imply that the company will likely deliver solid capital gains.
