Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Passive-Income Investors: 2 Stocks You Must Buy Now!

Stock MarketsOct 16, 2021 11:45
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
Passive-Income Investors: 2 Stocks You Must Buy Now!

A company that has grown dividends over time can be considered fundamentally strong, as it showcases the resiliency of the underlying business. Further, if the company has been able to maintain its dividend streak across business cycles, it should be on the top of your buying list right now.

Dividend-paying companies allow investors to generate a passive-income stream as well as benefit from long-term capital gains. Here, we’ll look at two TSX stocks that should be on the radars of income investors today.

Algonquin Power & Utilities A large-cap stock that has underperformed the TSX in the last year, Algonquin Power & Utilities (TSX:AQN)(NYSE:AQN) has generated more than 400% to investors in dividend-adjusted returns since October 2011. The company has, in fact, increased dividends at an annual rate of 10% in the last decade. It currently offers investors a tasty forward yield of 4.7%.

Algonquin Power & Utilities derives two-thirds of its earnings from utilities and the rest from its renewable energy business. The average length remaining on the company’s renewable energy contracts is around 13 years. Its regulated and long-term contracted assets enable AQN to generate predictable cash flows, which support consistent dividend increases.

Algonquin’s operating margin is over 20%, which suggests its dividend payouts are sustainable. In fact, the dividend-payout ratio stands at just 41%, which indicates investors can expect payments to increase in the future as well. A key driver for dividend increases is the rise in cash flows, which, in turn, is dependent on rising capital expenditures.

Algonquin’s renewable generation capacity is 2.3 gigawatts, and it expects to spend $3.1 billion on clean energy projects through 2025 while total capex spending is forecast at $9.4 billion. These investments will allow the company to maintain the current mix between regulated utilities and renewable energy businesses.

AQN has already deployed $3.1 billion in expenditures in the first half of 2021. In the second quarter, its revenue rose by 54% year over year while adjusted EBITDA soared by 39% year over year.

TC Energy The second dividend stock on my list is TC Energy (TSX:TRP)(NYSE:TRP), which is among Canada’s largest companies. TC Energy stock’s dividend yield stands at 5.5% right now. Similar to other pipeline companies, TC Energy also generates stable cash flows, as they are backed by long-term contracts.

Right now, the energy giant plans to invest $21 billion in expansion projects, which will help it boost cash flows and raise dividend payouts — something it has done for the last 21 years. Growing environmental concerns might make it difficult for new projects to gain regulatory approvals, which makes TC Energy’s existing capacity all the more valuable.

In the last four years, TC Energy’s revenue has hovered around $13 billion with an operating margin of at least 20%. In the second quarter of 2021, it reported earnings per share of $1 while its quarterly dividend payment was $0.87.

The management team expects dividend payments to rise between 5% and 7% going forward on the back of expansion plans. In the last two decades, TC Energy has increased dividends at an annual rate of 7%.

The post Passive-Income Investors: 2 Stocks You Must Buy Now! appeared first on The Motley Fool Canada.

Fool contributor Aditya Raghunath owns shares of ALGONQUIN POWER AND UTILITIES CORP. The Motley Fool has no position in any of the stocks mentioned.

This Article Was First Published on The Motley Fool

Passive-Income Investors: 2 Stocks You Must Buy Now!
 

Related Articles

Will This Ultra-Cheap Stock Rebound Strongly Soon?
Will This Ultra-Cheap Stock Rebound Strongly Soon? By The Motley Fool - Dec 03, 2021

The pandemic has impacted some companies far more than others. Tech stocks surged last year while the rest of the economy has been recovering this year. One stock that seems to...

Should You Buy Enbridge (TSX:ENB) Stock Before 2022?
Should You Buy Enbridge (TSX:ENB) Stock Before 2022? By The Motley Fool - Dec 03, 2021

Long-term investors have a wealth of options to consider on the TSX when looking for suitable investments that align with their financial goals. The worst period of the pandemic...

Why Canada Goose (TSX:GOOS) Is Down 6.9% Today
Why Canada Goose (TSX:GOOS) Is Down 6.9% Today By The Motley Fool - Dec 03, 2021

Canada Goose (TSX:GOOS)(NYSE:GOOS) stock nosedived this morning. The stock is down 6.9% at the time of writing, while the rest of the stock market is trending lower, too. The...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email