The April 2025 market volatility has significantly reduced the price of many strong dividend stocks and inflated their yields. Many Canadian businesses and consumers fear the onset of recession. However, this is the third time a recession warning has come in the last five years, and the Canadian economy has avoided a recession so far. However, this does not mean the economy is invincible. Nobody knows how the events will turn out.
As an investor, you can remain cautiously optimistic and invest in stocks in which the risk is relatively lower.
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Two stocks to buy in April for their 8% yield
You may see some stocks offering a yield as high as 13–14%. However, they carry a risk of dividend cuts if the economy falls into a recession. While they are still a good investment, you can ease the anxiety of dividend cuts by investing in less-risky stocks. However, you will have to let go of the opportunity to earn a higher yield.
Slate Grocery REIT
Slate Grocery REIT (TSX:SGR.UN) is my first dividend pick for April as the stock trades 14.6% below its 2022 high of $16. What’s unique about this REIT is its 116 properties are in the United States and pay distributions in US dollars. However, Canadian investors get paid in Canadian dollars, helping you hedge against foreign exchange fluctuations.
The REIT has a 94.8% occupancy and most of its tenants are grocers. Its top two tenants contributing 18% towards the rental income are Kroger and Walmart. Grocers have a defensive business because they are unaffected by an economic crisis. Even among grocers, Slate Grocery REIT has a diversified tenant base, mitigating the risk further.
The stock price dip has inflated its yield to 8.7%. Now is a good time to buy the dip and secure a monthly passive income source that can help you fight the upcoming inflation.
Telus Corporation
Another interesting dividend buy in April is Telus Corporation (TSX:T). While all three Canadian telecom giants have been trading in a downturn for the last two years, Telus is my preferred choice. The company’s management is restructuring its business. It is looking to sell non-core assets to reduce its debt. The telco has reduced its capital expenditure and is using the regulatory changes to its advantage.
While Telus is providing smaller competitors with access to its multi-billion-dollar network, it is offering its bundled services through its competitors’ networks. Small players cannot compete with Telus’s bundled offerings and lower prices.
Moreover, Telus’s digital arm has been working on various solutions such as telehealth and artificial intelligence offerings to help businesses and customers adopt digital solutions.
The high debt is part and parcel of the cyclical business. The initial capital cost is behind Telus. Now, it is looking to monetize its fibre network to build multiple sources of revenue through broadband and wireless subscriptions, business solutions, and more. As capital expenditures reduce and revenue increases, the network investment will pay off and generate profits. The future revenue can support dividend growth for years to come.
Telus’s stock is trading near its nine-year low, which has inflated its yield to 7.9%. Now is a good time to lock in such a high yield and a 7% annual dividend growth rate. This stock can help you beat high inflation and support your active income.
