When choosing which stocks to invest in for the long haul, there are certainly different investor types. Some focus purely on growth, looking for capital appreciation and accepting higher risks for higher potential returns. Other investors may be nearing retirement age or in need of steady income, looking for a mix of passive income investments (such as bonds) and dividend stocks to provide long-term income (and a growing income stream, if possible).
I’d argue that both camps should be value focused. Thus, in this article, I’m going to highlight three dividend stocks with relatively juicy yields that also have excellent valuations. These are companies with strong fundamentals driving their payouts I think can continue to outperform over the long-term.
With that, let’s dive in!
Enbridge
Enbridge (TSX:ENB), together with its subsidiaries, operates as a prominent energy producer and distributor. The company’s business model can be divided into five key sectors: gas transmission and midstream, energy services, renewable power generation, liquid pipelines, and gas distribution. Focused on expanding its footprint in North America’s renewable power generation, Enbridge has seen surging investor interest. Accordingly, Enbridge’s stock price has increased more than 15% in recent months, trading above $46 per share at the time of writing.
Now, Enbridge’s share price is still down from the recent peak we saw in the oil and gas sector following a surge in crude prices. With supply and demand coming into balance, I don’t foresee such a situation taking place again. Accordingly, investors may want to settle in around these levels and simply focus on collecting dividend payments.
That said, doing so isn’t all that bad. Enbridge currently pays investors a juicy yield of 7.8% to be patient. Accordingly, this is a stock investors focused purely on yield may want to consider at current levels.
Dream Industrial REIT
Dream Industrial REIT (TSX:DIR.UN) stands as one of the prominent real estate investment trusts in Canada. With an extensive portfolio comprising 321 industrial assets spanning the United States and Europe, the company boasts leasable space exceeding 70.6 million square feet. Notably, in October 2023, the company announced a dividend payout of US$0.058 per share, resulting in an annual dividend of US$0.70.
The company’s recent results were promising, with Dream Industrial reporting a 10.4% surge in net operating income. That’s a key metric for REITs, particularly with concerns around vacancy rates and rent collection picking up.
In the world of industrial real estate, I think we’re likely to see less pressure on this sector than others, if a recession materializes. Thus, I think Dream Industrial’s 5.2% dividend yield is about as good as it gets for real estate investors right now.
Fortis
Canada-based Fortis (TSX:FTS) is among the top gas and electric utilities companies I continue to focus on. The company operates 10 utility distribution and transmission assets in the US and Canada, serving more than 3.4 million customers. In terms of size, scale, and stability (three “S’s” I like in the dividend space), Fortis is among the top companies to consider right now, in my view.
Indeed, Fortis stands out among investors for its stable stock and longstanding dividend payouts. Additionally, from a dividend growth perspective, there are few better options than Fortis. The utility giant has raised its distribution for 50 straight years, meaning this recent period of consolidation we’ve seen in Fortis stock has simply provided higher yields for investors to jump on. That’s something I think many income-oriented investors can get behind.
With a current yield of 4.4%, Fortis provides the right mix of defensiveness, value, and yield I think long-term investors should be after. This is a stock I’d consider buying at current levels, considering its dividend growth trajectory and reasonable valuation.
