Investing in quality high-dividend stocks can help you earn a passive-income stream for life. You need to identify companies that generate steady cash flows across business cycles, have sustainable payout ratios, and are armed with robust balance sheets.
Ideally, these dividend-paying companies should increase their earnings consistently, resulting in dividend hikes each year. Two such energy infrastructure TSX stocks with a high dividend yield are Pembina Pipeline (TSX:PPL) and Enbridge (TSX:ENB).
Let’s see how you can earn $6,000 in annual dividend income each year by investing in these two dividend stocks.
Pembina Pipeline stock
A Canada-based pipeline company, Pembina Pipeline, ended the third quarter (Q3) of 2023 with an adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) of $1.02 billion, an increase of 6% year over year. Its EBITDA grew due to growing volumes, rising utilization rates, and strong performance from its marketing business.
Pembina recently announced plans to acquire Enbridge’s remaining in the Alliance Pipeline, Aux Sable Pipeline, and NRGreen joint ventures for $3.1 billion. The acquisition will mean Pembina now has complete ownership of these natural gas assets, which should drive future cash flows higher.
The Alliance Pipeline is a natural gas transportation system operating in Canada and the United States. It spans 3,888 kilometres, ferrying natural gas from Western Canada to Chicago. The Aux Sable processing plant is located in Illinois and connected to the Alliance Pipeline and processes natural gas liquids from the pipeline.
Pembina Pipeline pays shareholders an annual dividend of $2.67 per share, indicating a forward yield of 5.8%. These payouts have increased by 11.2% annually in the last 17 years, which is exceptional for an energy company. Priced at 15 times forward earnings, PPL stock is not too expensive and trades at a discount of 12% to consensus price target estimates.
Enbridge stock
Among the most popular dividend stocks in Canada, Enbridge offers you a tasty dividend yield of 7.7%. A majority of its cash flows are tied to inflation-linked, long-term contracts, allowing Enbridge to raise dividends for 28 consecutive years.
It recently disclosed plans to acquire multiple gas utility businesses from Dominion Energy, which will drive earnings growth in the near term. To complete the acquisition, Enbridge raised $8 billion in debt and has secured $14 billion in total funding. The utility acquisitions are expected to close by the end of 2024, improving the resiliency of Enbridge’s cash flows.
In the last 20 years, Enbridge has returned 11% annually to shareholders, easily outpacing the broader markets. Despite these stellar gains, ENB stock is priced at 16 times forward earnings and trades at a discount of 12.8% to consensus price target estimates.
The Foolish takeaway
Investing a total of $90,606 distributed equally in the two TSX dividend stocks will help you earn $1,500 each quarter or $6,000 in annual dividends. If the companies raise dividends by 5% annually, your dividend income will double in the next 14 years.
COMPANY
RECENT PRICE
NUMBER OF SHARES
DIVIDEND
TOTAL PAYOUT
FREQUENCY
Enbridge
$47.51
820
$0.915
$750.3
Quarterly
Pembina Pipeline
$45.95
1,124
$0.6675
$750.27
Quarterly
However, investing such a huge sum in just two stocks does not make financial sense. You should identify other blue-chip TSX stocks and further diversify your dividend portfolio.
TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 103.40 points at 24,542.48.
In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.
The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.
The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.
The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.
This report by The Canadian Press was first published Oct. 16, 2024.
TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.
The S&P/TSX composite index was up 205.86 points at 24,508.12.
In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.
The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.
The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.
The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.
This report by The Canadian Press was first published Oct. 11, 2024.
TORONTO – Canada’s main stock index was little changed in late-morning trading as the financial sector fell, but energy and base metal stocks moved higher.
The S&P/TSX composite index was up 0.05 of a point at 24,224.95.
In New York, the Dow Jones industrial average was down 94.31 points at 42,417.69. The S&P 500 index was down 10.91 points at 5,781.13, while the Nasdaq composite was down 29.59 points at 18,262.03.
The Canadian dollar traded for 72.71 cents US compared with 73.05 cents US on Wednesday.
The November crude oil contract was up US$1.69 at US$74.93 per barrel and the November natural gas contract was up a penny at US$2.67 per mmBTU.
The December gold contract was up US$14.70 at US$2,640.70 an ounce and the December copper contract was up two cents at US$4.42 a pound.
This report by The Canadian Press was first published Oct. 10, 2024.
