The TSX Composite Index jumped by 9.7% in the third quarter of 2024, delivering its best performance in more than four years. With stocks trading near their all-time highs, many investors might feel that the opportunity to find undervalued assets has passed. However, many high-yield dividend stocks still offer a reliable way to generate passive income, and some remain attractively priced, making them screaming buys in this bull market.
In this article, we’ll highlight two high-yield Canadian dividend stocks that you can consider adding to your portfolio today and hold for years to come.
Labrador Iron Ore Royalty stock
After sliding by around 15% in the previous two years, Labrador Iron Ore Royalty (TSX:LIF) has seen a minor 3% recovery so far in 2024 to currently trade at $32.86 per share with a market cap of $2.1 billion. On the positive side, the recent weakness in its share prices has driven its annualized dividend yield even higher, which currently stands at 8.5%.
If you don’t know it already, through its over 15% equity stake in the Iron Ore Company of Canada (IOC) and a 7% royalty on all of IOC’s sales of iron ore products, Labrador generates a steady stream of royalty income. In the second quarter of 2024, the company’s royalty income rose 3% YoY (year over year) to $52.3 million due mainly to higher iron ore prices and pellet sales tonnages. As a result, Labrador’s total revenue in the first half of the year climbed by 11.2% YoY to $109.8 million, and its adjusted earnings jumped by 28.6% from a year ago to $1.71 per share.
While the wildfires during the summer of 2024 did pose some operational challenges for IOC by temporarily halting production, IOC’s annual production guidance seems on track. Considering that, Labrador Iron Ore’s robust cash flow should support continued dividend payments.
Enbridge stock
The Canadian energy infrastructure giant Enbridge (TSX:ENB) could be another high-yield dividend stock you can consider buying on the Toronto Stock Exchange right now. The Calgary-headquartered company currently has a market cap of $120.8 billion as its stock trades at $55.25 per share with about 16% year-to-date gains. At this market price, ENB stock offers an attractive 6.6% annualized dividend yield.
In the quarter ended in June, Enbridge’s adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) rose 8.2% YoY to $4.3 billion with the help of higher volumes in its liquids and gas transmission businesses. Despite macroeconomic challenges, stronger profitability allowed the energy giant to maintain the distributable cash flow at $2.9 billion, reflecting a 3% increase from a year ago.
Enbridge recently completed its purchase of Questar Gas Company and Wexpro. These acquisitions have not only expanded its portfolio of quality regulated natural gas assets but are also expected to contribute positively to its EBITDA in the coming years. Besides Enbridge’s vast energy infrastructure footprint, the company is also heavily investing in renewable energy projects, including wind and solar farms, which should support future growth. These are some of the key reasons why I find this high-yield Canadian dividend stock really attractive to buy right now.
