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High-yield, dividend-paying stocks are an excellent investment avenue for generating passive income. Notably, shares of fundamentally strong companies with high yields significantly reduce the payback period of investment and serve as a hedge against inflation.
However, investors should be cautious when choosing stocks, as not all companies with high yields are reliable bets. It is important to focus on shares of companies with a stellar track record of dividend distributions and growth. Additionally, these stocks should have sustainable payouts over the long term.
Against this backdrop, let’s discuss three high-yield Canadian stocks offering at least 7% yield that would enable you to earn worry-free passive income.
Enbridge
Enbridge (TSX:ENB) is undoubtedly one of the most reliable high-yield stocks for passive income. This Canadian energy infrastructure giant has a stellar history of consistently paying and growing its dividend regardless of the commodity cycles. Besides being a dependable bet, Enbridge stock currently offers a lucrative yield of 7.65% based on its closing price of $47.84 on April 8.
Enbridge is a Dividend Aristocrat. It has consistently paid dividends for about 69 years and increased them for 29 consecutive years at a compound annual growth rate (CAGR) of 10%. The company’s payout history reflects the resiliency of its business model, its ability to grow inflation-protected earnings, and its expansion of distributable cash flows (DCF).
Looking ahead, its diversified income streams, regulated cost-of-service tolling framework, high utilization of assets, secured growth projects backlog, and contractual arrangement will drive its DCF and dividend distributions. The company anticipates its DCF per share to increase at a CAGR of mid-single digits in the long term, enabling it to grow its payouts in line with the DCF. Further, its strategic acquisitions and investments in conventional and renewable energy assets augur well for growth and would cushion its earnings and dividend distributions.
SmartCentres Real Estate Investment Trust
Investors looking for high and reliable yield could consider investing in SmartCentres Real Estate Investment Trust (TSX:SRU.UN) stock. This REIT (real estate investment trust) distributes most of its earnings as dividends. Further, SmartCentres’s resilient real estate portfolio generates strong same-property net operating income, which implies that its payouts are well-protected.
SmartCentres’ top-tier retail client base and impressive occupancy rate of 98.5% position it well to generate solid operating income. Moreover, its solid developmental pipeline, comprising mixed-use properties and a large untapped land bank, provides a solid foundation for future growth. It’s worth noting that SmartCentres predominantly holds fixed-rate debt, which offers insulation against high interest rates.
In summary, its high-quality assets portfolio, steady dividend payments, monthly payouts, and a compelling yield of 7.98% make it a top choice for investors seeking high-yield stocks for passive income.
BCE
Telecom service provider BCE (TSX:BCE) is a compelling stock for earning high yields and generating dependable passive income. This telecom giant has increased its dividends by 3.1% for 2024. Further, it has increased its dividends for 16 consecutive years. What stands out is that it currently offers an impressive yield of 8.97%.
BCE’s strategy of building its fibre network at a slower pace, de-emphasis on declining businesses, and workforce restructuring initiative are likely to generate cost savings and cushion its earnings.
Further, BCE’s focus on new growth areas of digital transformation, as well as cloud and security services, will support its future growth. Additionally, the expansion of its 5G services and broadband infrastructure will likely increase its customer base, drive its financials, and support future dividends.
