The TSX Composite Index jumped by 9.7% in the third quarter of 2024, delivering its best performance in more than four years. With stocks trading near their all-time highs, many investors might feel that the opportunity to find undervalued assets has passed. However, many high-yield dividend stocks still offer a reliable way to generate passive income, and some remain attractively priced, making them screaming buys in this bull market.
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High-Yield Canadian Dividend Stocks to Consider
In this article, we’ll highlight two high-yield Canadian dividend stocks that you can consider adding to your portfolio today and hold for years to come.
Labrador Iron Ore Royalty Stock
After sliding by around 15% in the previous two years, Labrador Iron Ore Royalty (TSX) has seen a minor 3% recovery so far in 2024, currently trading at $32.86 per share with a market cap of $2.1 billion. The recent weakness in its share prices has driven its annualized dividend yield even higher, currently standing at 8.5%.
Labrador generates a steady stream of royalty income through its over 15% equity stake in the Iron Ore Company of Canada (IOC) and a 7% royalty on IOC’s iron ore sales. In the second quarter of 2024, royalty income rose 3% year-over-year (YoY) to $52.3 million, primarily due to higher iron ore prices. As a result, total revenue in the first half of the year climbed by 11.2% YoY to $109.8 million, and adjusted earnings surged by 28.6% YoY to $1.71 per share. Despite operational challenges from wildfires in summer 2024, IOC’s production guidance remains on track, supporting Labrador’s robust cash flow and continued dividend payments.
Enbridge Stock
Another high-yield dividend stock worth considering is Enbridge (TSX), a Canadian energy infrastructure giant. Currently trading at $55.25 per share, Enbridge has a market cap of $120.8 billion and boasts about 16% year-to-date gains, along with an attractive 6.6% annualized dividend yield.
In the quarter ended June 2024, Enbridge’s adjusted EBITDA rose 8.2% YoY to $4.3 billion, driven by higher volumes in its liquids and gas transmission businesses. Despite macroeconomic challenges, the company maintained a distributable cash flow of $2.9 billion, reflecting a 3% increase from a year ago. Recent acquisitions, including Questar Gas Company and Wexpro, are expected to positively impact its EBITDA in the coming years. Moreover, Enbridge is heavily investing in renewable energy projects, including wind and solar farms, which should bolster future growth.
Should You Invest $1,000 in Enbridge?
Before making an investment in Enbridge, consider that the Motley Fool Stock Advisor Canada recently identified ten stocks they believe are the best buys right now, and Enbridge was not among them. However, the potential for significant returns, as demonstrated by past recommendations, suggests it’s worth careful consideration.
Investing in these high-yield Canadian dividend stocks could provide a stable income stream while participating in the broader market’s recovery.
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As the TSX Composite Index shows impressive growth, opportunities for investment in high-yield dividend stocks like Labrador Iron Ore Royalty and Enbridge remain attractive. These stocks not only offer the potential for capital appreciation but also reliable passive income, making them compelling choices for long-term investors.