The 3 Best Dividend Stocks for High Yield in 2021

Theses top dividend stocks with reliable payouts and high yields can help investors build wealth and generate strong income streams in 2021.

| More on:
Increasing yield

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn moresdf

Income investors are constantly searching for the best TSX dividend stocks that offer above-average yield.

Top Canadian dividend stocks in the TSX Index pay reliable dividends supported by strong cash flow. Industry leaders, stocks with wide moats, and companies that provide essential products or services tend to be good picks.

Why Enbridge is one of the best dividend stocks for high yield

Enbridge (TSX:ENB)(NYSE:ENB) provides a 7.5% yield. The energy infrastructure giant raised the payout last year, and investors should see steady dividend hikes of 5-7% annually over the medium term.

Enbridge is best known for its oil pipelines. This division took a hit in 2020 but a return to near-capacity volumes should occur in 2021. In the meantime, Enbridge’s natural gas utility businesses, gas transmission, storage, and renewable energy assets continue to perform well.

The stock looks cheap near $45 per share. The 12-month high is $57, and a run to $55 wouldn’t be a surprise by the end of 2021. Long-term investors have enjoyed fantastic returns with Enbridge stock.

IGM Financial is an attractive high-yield stock pick for the next 20 years

IGM Financial (TSX:IGM) offers a 6.4% dividend yield. The company owns IG Wealth Management, Mackenzie Investments, and Investment Planning Counsel. IGM Financial also owns a 46% stake in fintech disruptor Wealthsimple.

These businesses help clients with all aspects of their wealth management and financial planning. In the coming years, analysts anticipate a wealth transfer of tidal-wave proportions. Recipients of decades’ worth of property and stock appreciation will increasingly turn to professionals to help them manage this wealth.

IGM Financial is part of the Power Corp family of companies. A move by the parent to privatize IGM Financial could result in a nice premium on the stock price. An IPO of Wealthsimple might also occur and provide a special dividend opportunity.

Why Russel Metals is a top high-yield stock to buy now

Russel Metals (TSX:RUS) is one of the largest metals distribution players in North America with steel distribution, metals service centres, and an energy products division.

The new administration in the United States should lead to less erratic tariff disputes in the next few years. At the same time, large fiscal stimulus efforts in the U.S. and Canada should support strong demand for Russel Metals products. The energy sector is also on the cusp of a rebound.

Russel Metals is a reliable dividend stock. The board held the payout steady during the past two downturns, so investors should be confident the distribution is safe.

At the current share price near $23, the stock provides a 6.5% yield. Investors who’d bought the stock at the March 2020 low have already doubled their money, but more upside should be on the way.

Russel Metals grows through acquisitions. It recently completed another deal, and ongoing takeovers should continue as the industry consolidates. At some point, Russel Metals itself might become a target.

The bottom line on top dividend stocks for high yield

Enbridge, IGM Financial, and Russel Metals are three of the best high-yield dividend stocks to consider in 2021. The distributions should be very safe, and investors get a short at huge increases in the stock prices by the end of the year.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

The Motley Fool owns shares of and recommends Enbridge. Fool contributor Andrew Walker owns shares of Power Corp and Enbridge.

More on Dividend Stocks

growing plant shoots on stacked coins
Dividend Stocks

5 Dividend Stocks to Buy With Yields Upwards of 5%

These five companies all earn tonnes of cash flow, making them some of the best long-term dividend stocks you can…

Read more »

funds, money, nest egg
Dividend Stocks

TFSA Investors: 3 Stocks to Start Building an Influx of Passive Income

A TFSA is the ideal registered account for passive income, as it doesn't weigh down your tax bill, and any…

Read more »

A red umbrella stands higher than a crowd of black umbrellas.
Dividend Stocks

3 of the Safest Dividend Stocks in Canada

Royal Bank of Canada stock is one of the safest TSX dividend stocks to buy. So is CT REIT and…

Read more »

Growing plant shoots on coins
Dividend Stocks

1 of the Top Canadian Growth Stocks to Buy in February 2023

Many top Canadian growth stocks represent strong underlying businesses, healthy financials, and organic growth opportunities.

Read more »

stock research, analyze data
Dividend Stocks

Wherever the Market Goes, I’m Buying These 3 TSX Stocks

Here are three TSX stocks that could outperform irrespective of the market direction.

Read more »

woman data analyze
Dividend Stocks

1 Oversold Dividend Stock (Yielding 6.5%) to Buy This Month

Here's why SmartCentres REIT (TSX:SRU.UN) is one top dividend stock that long-term investors should consider in this current market.

Read more »

IMAGE OF A NOTEBOOK WITH TFSA WRITTEN ON IT
Dividend Stocks

Better TFSA Buy: Enbridge Stock or Bank of Nova Scotia

Enbridge and Bank of Nova Scotia offer high yields for TFSA investors seeking passive income. Is one stock now undervalued?

Read more »

Golden crown on a red velvet background
Dividend Stocks

2 Top Stocks Just Became Canadian Dividend Aristocrats

These two top Canadian Dividend Aristocrats stocks are reliable companies with impressive long-term growth potential.

Read more »