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Investors seeking a stable income may turn to Canadian dividend-paying stocks. Fortunately, there are a number of companies on the TSX with attractive dividend yields and solid fundamentals to sustain their distributions over the long term.
In this article, I discuss three cheap Canadian stocks that offer at least 6% yield. These dividend-paying companies operate in various sectors of the Canadian economy and provide a buffer against market volatility. With interest rates also expected to fall, now could be an ideal time to lock in these high yields.
SmartCentres Real Estate Investment Fund
Real Estate Investment Trusts (REITs) are known for their high payout ratios, making them one of the best options for investors seeking a regular income. Leading Canadian REITs include SmartCentres Real Estate Investment Fund (TSX:SRU.UN) represents an attractive investment option with its high yield of 7.7%, consistent payouts and affordability.
SmartCentres REIT owns high-traffic centers that attract strong tenant interest and result in high occupancy rates. For example, the REIT’s occupancy rate improved 50 basis points to 98.2% in the second quarter (Q2) of 2024. While occupancy remains high, the company continues to benefit from solid momentum in rental demand and leases. The company leased approximately 25,000 square feet of vacant space in the second quarter, with rent increasing by an impressive 8.5%.
The REIT is well positioned to consistently grow its net operating income from properties. The higher percentage of retail tenants will likely add stability to its financial performance and ensure a high cash-coin rate. In addition, increased leasing interest, renewals and renewals will likely support its growth. In addition, the company will likely benefit from the development of mixed-use properties, which will enable constant portfolio expansion and a large undeveloped land inventory.
In summary, SmartCentres REIT is an attractive choice for income-oriented investors seeking high and reliable returns.
Telus
Telus (TSX:T) is under pressure due to near-term competitive and macroeconomic headwinds. Nevertheless, the leading Canadian telecommunications company continues to expand its customer base and achieve sustainable and margin-accretive growth. Thanks to its extensive cost efficiency programs, the company consistently generates sufficient profits to support its distributions.
Since 2004, Telus has paid out $21 billion in dividends to its shareholders. The company has consistently increased its dividend as part of its multi-year dividend growth program. In addition, it plans to increase its dividend by 7-10% annually in the coming years.
Telus is focused on growing its customer base profitably and reducing costs. In addition, the company is investing heavily in improving its network infrastructure, technology and operations, which bodes well for future growth. The telco is also expanding its PureFibre network and using generative artificial intelligence (AI) to capitalize on digital transformation. Overall, Telus is a reliable dividend stock that trades cheaply and offers a high yield of over 7%. In addition, its dividend payout ratio of 60-75% of free cash flow is sustainable.
Bank of Nova Scotia
Bank of Nova Scotia (TSX:BNS) or Scotiabank is a reliable dividend stock. Shares of this leading financial services company trade cheaply compared to other companies. BNS stock trades at a price-to-book ratio of one, which is below its historical average and the average of other companies. In addition, its price-to-earnings ratio of 9.7 is lower than its peers.
Although Scotiabank shares trade cheaply, they offer an excellent yield of 6.7% close to the current market price. The bank has been paying dividends for more than a century. Moreover, its dividend has grown at a compound annual growth rate of 6% since 2013.
The Bank’s diversified revenue streams, exposure to high-growth markets and efficiency initiatives continue to support its finances and dividend payments. In addition, its solid balance sheet and capital ratios provide stability to its distributions.
