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 buy.

| More on:
growing plant shoots on stacked coins

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

It’s understandable why Canadians love to buy dividend stocks. Dividend stocks allow investors to receive passive income each quarter and, in some cases, each month. At the same time, though, it allows you to participate in the appreciation of the stock.

Plus, when stocks pay back some of their earnings to investors through a dividend, it helps to reduce risk. And in this environment, when markets struggle to gain value and even potentially lose value, the dividend payments might be some of the only returns you see for a brief period.

If you’re looking for dividend stocks to buy that offer an attractive yield and boost your passive income, here are five top dividend stocks that each offer a yield upwards of 5%.

Two top energy stocks to buy paying impressive dividends

Many energy stocks pay dividends, but it’s essential to find companies with lower risk and strong free cash flow to minimize the risk that the dividend will be cut in a commodity down cycle.

And while nothing is ever guaranteed, two of the best dividend stocks in the energy sector are Freehold Royalties (TSX:FRU) and Enbridge (TSX:ENB).

Freehold is an interesting stock, because it earns a royalty for all the oil and gas produced on its land. Therefore, Freehold earns tremendous free cash flow, since it doesn’t need to spend any cash on capital expenditures.

For example, Freehold offers a yield of roughly 7% right now and is expected to have a payout ratio of just over 50% in 2023. That not only shows that the dividend is reasonably safe, but it also shows that Freehold is generating enough cash to invest in acquiring more land to expand its portfolio.

Enbridge is another of the best dividend stocks to buy, because it’s an energy infrastructure stock with a diversified portfolio of essential services.

Another attractive feature of Enbridge’s business is that many of its assets are long-life assets that don’t require much maintenance and allow it to earn tonnes of cash flow.

Therefore, because it earns so much cash and has such important operations, it’s one of the best dividend stocks you can buy.

Not only does it offer a yield of roughly 6.8% today, but it’s also increased its dividend every year for more than a quarter century, showing what an impressive passive-income generator it can be.

A high-quality utility stock

Utility stocks like Emera (TSX:EMA) are some of the most reliable dividend stocks you can buy since they offer essential services, are regulated by governments and earn highly predictable cash flow.

Created with Highcharts 11.4.3Emera PriceZoom1M3M6MYTD1Y5Y10YALLstaging.www.fool.ca

Furthermore, because the market knows that utility stocks are so reliable, they are much less volatile than the broader market, making them some of the best dividend stocks to buy to protect your capital in these uncertain market environments.

Emera currently offers a dividend yield of just over 5% and has a lengthy dividend-growth streak of 15 consecutive years.

An excellent telecommunications stock

Another high-quality dividend stock to buy if you’re looking to generate income is BCE (TSX:BCE), the telecommunications giant.

Telecommunication services have increasingly become essential in recent years, and with the rapid improvement in technology, such as 5G, it’s an industry with tonnes of long-term growth potential.

Furthermore, much like Enbridge, BCE owns plenty of long-life assets, which allows it to earn billions in cash flow each year.

That cash gives BCE the ability to consistently increase its dividend, with the stock currently yielding 6.25% and on a dividend-growth streak of 13 years.

A royalty stock made for dividend investors

Lastly, Pizza Pizza Royalty (TSX:PZA) is an intriguing stock, because it earns a royalty off all the sales of Pizza Pizza and Pizza 73 locations around the country with only minimal expenses. This allows it to pay investors almost all its cash back with a monthly dividend.

Many investors, including me, have been cautious about Pizza Pizza and its 6% yield in this economic environment due to inflation impacting consumers’ ability to spend on discretionary goods, such as eating out.

However, to Pizza Pizza’s credit, it continues to perform well and hasn’t seen a decline in sales since the pandemic, making it one of the top dividend stocks to add to your buy or watchlists today.

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.

Fool contributor Daniel Da Costa has positions in Bce, Enbridge, and Freehold Royalties. The Motley Fool recommends Emera, Enbridge, and Freehold Royalties. The Motley Fool has a disclosure policy.

More on Dividend Stocks

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 »

Business people shaking hands
Dividend Stocks

TFSA Couples: How to Make $890/Month in Tax-Free Passive Income

TFSA investors who have room with their partner can invest in these three stocks and create incredible monthly passive income…

Read more »