Top Canadian Dividend Stocks Yielding Over 7% in September 2023

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Historically, September has been challenging for equity markets. This year, oil prices are also rising, making investors nervous. Higher oil prices could drive inflation, prompting central banks to tighten their monetary policies further, thus hurting equity markets. So, amid the growing uncertainty, one can add the following three high-yielding dividend stocks to earn a stable passive income.

Enbridge

Enbridge (TSX:ENB) would be my first pick due to its long history of dividend hikes. The midstream energy company, which transports oil and natural gas across North America, has been raising its dividends for the previous 28 years at an annualized growth rate of over 10%. The company generates around 98% of its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) from low-risk businesses, while 80% is inflation-indexed. So, its cash flows are stable and predictable, thus allowing the company to raise its dividend consistently.

Meanwhile, Enbridge completed its previously announced acquisition of several local gas utilities in the United States for $19 billion last week. The acquisition could substantially raise the company’s cash flow and EBITDA. Besides, it is also progressing with its secured capital program of $19 billion, with around $6 billion worth of projects to become operational by 2024. So, given its healthy growth prospects and solid underlying businesses, I believe the company’s future payouts are safe. Currently, the company pays a quarterly dividend of $0.8875/share at a yield of 7.76% and trades at an attractive NTM (next 12 months) price-to-earnings multiple of 16.1, making it an excellent buy for income-seeking investors.

BCE

Telecommunication companies enjoy healthy cash flows due to their recurring revenue streams. Also, higher initial capital investments have created an entry barrier for new entrants while expanding the margins of the existing players. So, I have selected BCE (TSX:BCE), one of Canada’s top three telecom players, as my second pick. The company has raised its dividend by over 5% for the previous 15 years, while its forward yield currently stands at 7.01%.

Further, the telecom company has expanded its 5G, 5G+, and broadband infrastructure through a three-year aggressive capital investment from 2020 to 2022. With most of its infrastructure in place, management has decided to lower its capital investments this year, thus providing it with more free cash flows to distribute among shareholders. So, I believe BCE, trading at 17 times its projected earnings for the next four quarters, could continue rewarding its shareholders at a healthier rate.

TC Energy

Despite its near-term weakness while facing losses from an oil spillage at its Keystone pipeline facility and rising interest rates, I am picking TC Energy (TSX:TRP) as my final pick due to its regulated business and stable cash flows. The company earns around 79% of its adjusted EBITDA from regulated assets and 17% from long-term contracts. So, the energy firm generates healthy cash flows, allowing it to raise its dividends for 23 years at a CAGR of 7%. With a quarterly dividend of $0.93/share, it currently offers a healthy dividend yield of 7.58%.

The midstream energy company plans to spin off its pipeline segment to increase shareholders’ value. Besides, it expects to bring $6 billion worth of projects into service this year. It is working on selling its 40% stake in Columbia Gas Transmission and Columbia Gulf Transmission in a $5.2 billion deal to strengthen its balance sheet and improve its financial flexibility.

The post Top Canadian Dividend Stocks Yielding Over 7% in September 2023 appeared first on The Motley Fool Canada.

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* Returns as of 8/16/23

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Fool contributor Rajiv Nanjapla has no position in any of the stocks mentioned. The Motley Fool recommends Enbridge. The Motley Fool has a disclosure policy.