With the second-largest economy in the world, China, posting weak economic numbers and growing concerns over the weakness in the banking sector, the global equity markets are under pressure this month. Amid the broader weakness, the S&P/TSX Composite Index is down 4% this month.
Given the uncertain outlook, investors can buy high-yielding dividend stocks to earn a stable passive income, irrespective of the market movements. Passive income could help investors to lower the impact of rising prices in this inflationary environment. By investing around $5,000 in each of the below three TSX stocks, investors can earn around $265 every quarter, or over $1,060 per annum.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | INVESTMENT | DIVIDEND | TOTAL PAYOUT | FREQUENCY |
| ENB | $47.04 | 106 | $4,986 | $0.8875 | $94.1 | Quarterly |
| BCE | $54.89 | 91 | $4,995 | $0.9675 | $88 | Quarterly |
| BNS | $62.08 | 80 | $4,966 | $1.06 | $84.8 | Quarterly |
| Total | $266.9 |
Enbridge
Enbridge (TSX:ENB) is a diversified midstream energy company with substantial exposure to clean energy production. The company operates a highly regulated business, with only 2% of its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) susceptible to commodity price fluctuations. Also, around 80% of its adjusted EBITDA protected against inflation, thus offsetting some of the impacts of rising prices and generating stable and predictable cash flows.
Supported by these stable cash flows, the midstream energy company has raised its dividend at a CAGR (compound annual growth rate) of 10% for 28 previous years. It currently pays its shareholders a quarterly dividend of $0.8875/share, with its forward yield at a juicy 7.55%. The company is progressing with its $19 billion secured growth program and expects to put around $6 billion worth of projects into service this year and next. Supported by these investments, Enbridge’s management expects its adjusted EBITDA to grow by 4-6% Through 2025 and around 5% after that. So, I believe the company’s future payouts are safer, thus making it an attractive buy.
BCE
Another dividend stock you could add to your portfolio would be BCE (TSX:BCE), one of Canada’s top three telecom players. The high initial investment in the telecommunication sector has created a substantial barrier for new entrants, thus delivering higher margins for existing players. The recurring revenue streams generate stable cash flows, allowing telecom companies to pay dividends at a healthier rate. BCE has raised its dividends by over 5% yearly for the past 15 years, with its forward yield at 7.05%.
Meanwhile, the demand for telecommunication services is growing amid digitization. Amid the growing demand, BCE continues to expand its 5G and 5G+ infrastructure across Canada. The telecom giant expects to complete 85% of its planned broadband buildout program by the end of this year. These initiatives could expand its customer base and ARPU (average revenue per user), thus boosting its financials in the coming years. Considering its solid underlying business and healthy growth prospects, I believe BCE would be an ideal buy for income-seeking investors.
Bank of Nova Scotia
My final pick would be the Bank of Nova Scotia (TSX:BNS), which has been rewarding shareholders by paying dividends since July 1833. The bank has a strong presence across the United States, Canada, Mexico, Peru, Chile, Columbia, and Brazil. Amid the weakness in the banking sector, the company has witnessed substantial selling over the last 12 months. Amid the correction, the company’s next 12-month price-to-earnings multiple has declined to 8.6, making it an attractive buy.
Notably, the company’s financial position is improving amid a double-digit customer deposit growth in the second quarter, which ended in April. Its liquidity coverage ratio stood at 131% at the end of the quarter, an improvement from 122% in the previous quarter. Also, BNS’s management raised its quarterly dividend by $0.03 to $1.06/share, with its forward yield at 6.83%. The raising of dividends depicts BNS’s management’s confidence in its future cash flows, thus making it an ideal buy for income-seeking investors.
