Stock investors focus on either income generation or total returns. In most cases, the choice depends on individual circumstances and investment horizon. For long-term investors with dividends as the primary consideration, the approach is simple.
Invest in an established dividend payer, accumulate shares, and reinvest the dividends to achieve your financial goal. Still, some chase after a specific yield. Assuming your base target is 4%, four TSX stocks pay more than your desired yield.
5G network leader
Telus (TSX:T)(NYSE:TU), Canada’s second-largest telecommunications company, pays a juicy 4.83% dividend. The telco stock ($25.70 per share) is ideal for risk-averse investors, too, because the business generates billions of dollars in yearly revenues regardless of market conditions. Telecommunications services and the internet are 24/7 necessities, not luxuries.
You don’t need exhaustive analysis before taking a position in this dividend stock. The $34.61 billion telco operates in a near-monopoly where competition is hardly a threat. Telus is also at the front and centre of the 5G network rollout in Canada. Currently, 81 communities across the country experience the speed and quality of Telus’s 5G connectivity. It plans to grow its 5G footprint into 2021 and beyond.
Superior Plus (TSX:SPB), an energy distribution company with specialty chemicals businesses, offers the exact lucrative yield as Telus. At $15.03 per share, the utility stock is up 25.08% year to date. Today, it’s North America’s leading distributor and marketer of propane and distillates and related products and services.
The $2.61 billion company’s core strategy is to invest in established businesses that generate stable free cash flow. Furthermore, the locations must be in desirable geographies. Its footprint in the Southeast U.S. is about to expand following the acquisition of Freeman Gas & Electric Company for US$170 million.
Superior Plus expects Freeman Gas to generate approximately US$22 million in adjusted EBITDA on a run-rate basis 24 months after the transaction closes. Now is the perfect time to scoop this utility stock.
Strongest asset portfolio
Canadian Natural Resources (TSX:CNQ)(NYSE:CNQ) is a rock-solid income source. The $44.2 billion independent crude oil and natural gas producer offers a 5.1% dividend. The current share price is $36.94. The energy stock’s total return over the last 45 years is 17,994.62% (12.25% CAGR).
Today, CNR boasts one of the strongest and most diversified asset portfolios. It has a balanced mix of natural gas, light crude oil, heavy crude oil, bitumen, and synthetic crude oil. The assets in North America, the U.K. North Sea, and Offshore Africa enable the company to generate long-term adjusted funds flow amid challenging economic environments.
Corby Spirit & Wine (TSX:CSW.A) isn’t a high flyer, although the consumer-defensive stock packs a mean dividend. At $17.90 per share, the yield is 4.69%. The $517 million company has been manufacturing and selling wines and spirits since 1924. It also imports some of its alcoholic beverages.
In fiscal 2020 (year ended June 30, 2020), revenue (2.3%) and net earnings (3.7%) growth were stable. Fast forward to Q2 fiscal 2021 (quarter ended December 31, 2020), and the consumer demand has remained resilient. The gains in the retail channel offset the pandemic’s severe interruptions on on-premise and travel retail channels.
If the alcoholic beverage industry isn’t to your liking, choose from among the three other dividend stocks whose businesses you’re more comfortable investing in.
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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends CORBY SPIRIT AND WINE LTD CLASS A. The Motley Fool recommends SUPERIOR PLUS CORP. and TELUS CORPORATION.