Business & Investment

New Investor: Three Canadian Dividend Stocks for a Safe 4% Yield

Interest rates are low. So it’s great to be able to increase your passive income with solid dividend stocks.

If you don’t know this yet, avoiding the highest yielding dividend stocks is probably in your best interests. There is a reason why the market is ordering these stocks high yields. They have the potential to reduce dividends or achieve below average growth. Both scenarios should be avoided if possible.

Dividend stocks that offer a yield of 3-4% are usually especially To increase Their dividends over time.

GIC secures principal, but its returns are low, especially in today’s low interest rate environment. Currently, the highest 5-year GIC rate is 1.8%. Equities are risky, but buying solid equities with the right valuations and investing over the long term can result in much higher income and total returns.

With 1.8% income, an investment of $ 10,000 will grow to $ 11,953 in 10 years. With a 4% income, the result is $ 14,802. Importantly, high quality stocks are much more likely to be valued over a 10 year period. So, no matter what, in the long run, reducing volatility will give you greater returns through the following stocks compared to GIC:

Here are three Canadian dividend stocks that can get a safe yield of 4%.

RBC stock

Royal Bank of Canada (TSX: RY)(NYSE: RY) It is one of Canada’s leading banks. In addition, quality banks are diversified by business and region, providing resilient returns throughout the business cycle.

In 2020, RBC equity revenues were diversified to 45% from private and commercial banks, 24% from capital markets, 19% from wealth management, 7% from insurance and 5% from investors and financial services. .. The revenue came from Canada (59%), the United States (25%), and the rest of the world (16%).

As a result, RBC has steadily reported net income of over $ 11 billion since 2017, with a return on equity of at least 14%.

You can now buy this great business at a fair price of about $ 108 per share, with a yield of about 4%.

Fortis stock

Fortis (TSX: FTS)(NYSE: FTS) Stocks are one of Canada’s oldest dividend aristocrats. The annual compound interest growth rate for the past 10 years has been 5.6%, and we have continuously increased dividends for 47 consecutive years.

Over the years, regulated utilities will diversify into 10 utilities, including electricity and gas utilities in Canada, the Caribbean, and the United States, as well as valuable independent transmission operations in the United States. Enlarged.

Fortis made a wise strategic decision to start investing in the United States in 2012, when the dollar was weak against the dollar coin. About 55% of the $ 19.6 billion five-year capital plan is in the United States

This capital program will help drive Fortis’ intended dividend growth of approximately 6% annually through 2025. Since 85% of this capital plan consists of small projects, there is little uncertainty about Fortis’ growth outlook.

Fortis stock It has been trading flat for almost a year since the recovery from the pandemic market crash in March 2020 was sluggish. Therefore, it is not a bad time to acquire some shares for a safe dividend protected by predictable returns and a dividend payout ratio of approximately 75%.

Another Canadian Dividend Stock You May Like

As an industrial REIT Granite REIT (TSX: GRT.UN) is a pandemic beneficiary. Results for the fourth quarter of 2020 have not yet been reported, but it is estimated that operating capital per unit will increase by approximately 10% in 2020.

Granite REIT will continue to be a resilient dividend investment with a diverse portfolio of approximately 100 profitable properties.

It is still expanding its portfolio. As of late 2020, there were three properties under development and four lands for future development.

Both analysts Granite REIT Fortis has the potential to rise by about 13% in the next 12 months. That is, both are worth the purchase.

Stupid takeaway

RBC, Fortis and Granite REITs are some of the safest dividend stocks you can buy and hold. TSX.. Currently, they offer excellent yields of about 4%.

High-quality stocks tend to rise over time, but stocks fluctuate in nature. Therefore, if you plan to take positions in these stocks, it is best to have an investment period of at least 3-5 years.

Three stocks are not enough to diversify your portfolio. Here’s a higher quality business you should consider …

10 Best Stocks to Buy This Month

Ian Butler, a well-known Canadian investor, has nominated 10 shares for Canadians to buy today. So if you’re tired of reading about getting rich in the stock market, today may be a good day for you.
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New Investor: Three Canadian Dividend Stocks for a Safe 4% Yield

https://www.fool.ca/2021/02/18/new-investors-3-canadian-dividend-stocks-for-a-safe-4-yield/ New Investor: Three Canadian Dividend Stocks for a Safe 4% Yield

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