Consistent dividend payouts indicate that the company is financially healthy and generates stable and reliable cash flows. Given their regular payouts, dividend stocks are less prone to market volatility. Besides, investors can reinvest the dividend payouts to earn superior returns, thus making these stocks a must in your portfolios. Against this backdrop, let’s look at three stocks that offer over 6% dividends and trade at attractive valuations.
Telecommunications companies enjoy healthy cash flows due to recurring revenue streams, thus making their dividends safer. So, I have chosen Telus (TSX:T) as my first pick. The Vancouver-based telco is one of the high-yielding dividend stocks to have in your portfolio due to its impressive record of paying dividends. Since 2004, it has returned around $27 billion to its shareholders, with $22 billion in dividends and $5.2 billion in share repurchases. Also, T stock has raised its dividends 27 times since May 2011 and currently offers a juicy forward dividend yield of 8.1%.
Moreover, Telus continues to expand its customer base by adding 1.2 million customers last year. It was the third consecutive year of over 1 million customer additions. Its expanding 5G and broadband infrastructure, compelling bundled offerings, and improving customer experiences have led to its customer base expansion and financial growth. Besides, the company’s growth segments – Telus Health and Telus Agriculture & Consumer Goods – have also witnessed healthy growth amid strategic investments and strong executions.
With the demand for telecommunication services rising amid the increased usage of artificial intelligence and remote working and learning, Telus continues strengthening its infrastructure and plans to invest $2.5 billion this year. These growth initiatives could boost its financials, thus making its future dividend payouts safer. However, amid the broader weakness in the telecom sector, the company trades at an attractive NTM (next 12 months) price-to-sales multiple of 1.4, making it an excellent buy for income-seeking investors.
Another Canadian dividend stock I am bullish on is the Bank of Nova Scotia (TSX:BNS), which has paid dividends since 1833. The company offers financial services in over 20 countries, generating reliable financials and cash flows and paying dividends consistently. Also, the Toronto-based financial services company has raised its dividends at a 5.2% CAGR (compound annual growth rate) for the previous 10 years and currently offers a forward dividend yield of 6.1%.
Moreover, BNS has made a strategic investment by acquiring a 14.9% stake in KayCorp, strengthening its position in the high-growth United States market. Also, the company has sold its banking operations in Colombia, Costa Rica, and Panama to Davivienda, adhering to its long-term strategy of improving its operating efficiency in international markets. Besides, the falling interest rates could boost economic activities and drive credit demand, benefiting BNS. Despite its solid underlying business and healthier growth prospects, the company’s NTM price-to-earnings stands at 9.7, making it an attractive buy.
My final pick would be NorthWest Healthcare Properties REIT (TSX:NWH.UN), which acquires and manages highly defensive healthcare properties. The company’s long-term lease agreements with government-backed tenants allow it to enjoy higher occupancy and collection rates. Besides, its inflation-indexed lease agreements provide stability irrespective of the macro environment, thus supporting dividend payouts.
The Toronto-based healthcare REIT has sold around $1.4 billion of non-core assets, utilizing the net proceeds to pay off $1.1 billion of debt. The company has also strengthened its financial position by refinancing additional debt of $1 billion. It recently received an investment-grade credit rating, which could lower its borrowing cost. Considering all these factors, I expect NorthWest Healthcare to continue paying dividends at attractive rates. It currently offers a juicy forward dividend yield of 7.2% and trades at a reasonable price-to-book multiple of 0.8, making it an ideal addition to your portfolios.
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Fool contributor Rajiv Nanjapla has no position in any of the stocks mentioned. The Motley Fool recommends Bank of Nova Scotia and TELUS. The Motley Fool has a disclosure policy.
