Every investor wants income, and dividend stocks certainly look tempting when they offer huge returns. However, higher returns can sometimes come with low stock prices. That’s why it’s much more important to dig deeper and find the dividend stocks that offer a change in lifetime income. That’s why today we’re going to consider investing in options Sun life financially (TSX:SLF), Whitecap Resources (TSX:WCP), and Doman building materials (TSX:DBM). So let’s get into it.
SLF
SLF is one of those rare Canadian dividend stocks that actually looks like it was built to pay investors forever. It combines deep roots, steady cash generation and a business model designed to survive recessions, inflation and even shifting interest rate cycles. The dividend stock is a global insurance and asset management powerhouse. It makes money through insurance and asset management, US operations and Asia, as well as through its asset management business.
The dividend stock has a long track record of providing stable passive income. The current dividend is $3.12 per share per year, which increases the dividend twelve times since 2015! Furthermore, that 4% dividend yield is backed by a 60% payout ratio at the time of writing.
The latest quarter supports even more future growth, with net profit up 10% year over year and earnings per share (EPS) rising to $1.69 from $1.53 last year. Key growth drivers were rising net investment returns, strong asset management fees and solid margins in Asian insurance sales. While SLF stock is not a fast grower, it is growing steadily, making it a solid stock to hold in a long-term portfolio.
WCP
Then we have WCP shares, a dividend stock of a Western Canadian energy producer with core operations in Alberta, Saskatchewan and British Columbia. It focuses on light and medium oil – a cleaner product with a higher value than heavy oil – and also produces natural gas and natural gas liquids. The dividend stock has built its portfolio through a mix of acquisitions and disciplined development. These deals gave it scale and diversification across some of Canada’s most productive basins, particularly the Montney and Duvernay formations.
Currently, WCP stock offers a monthly dividend of $0.732 each year, with a yield of around 7% at the time of writing, backed by a stable payout ratio of 50%. The dividend was suspended during the 2020 oil crisis, but was reinstated and increased several times since. Indeed, the dividend is tripled since 2021!
As with SLF, profits support future growth. Production during the second quarter was 164,000 barrels of oil equivalent per day (boe/d), with cash flow of $625 million and net income of $350 million. Additionally, it has $1.6 billion in debt, with a target of $1 billion by 2026. All told, it’s a conservative dividend stock that is primed for future growth and long-term income.
D.B.M
Finally, we have DBM, a Canadian small-cap dividend stock that’s quietly checking off more options for long-term income investors than you might expect. It doesn’t have the global scale, nor the financial moat, but its foundations give it real staying power. It is now one of Canada’s largest distributors of lumber, building materials and building supplies. It also produces pressure-treated wood products and operates forest products facilities in Western Canada and the U.S. Pacific Northwest.
The dividend stock offers an annual dividend of $0.56, which currently yields 6.5% at writing and is backed by a 66% payout ratio. Like others, the dividend was briefly suspended during the pandemic but quickly restored. Now, payouts have been steadily increasing since 2021.
Profits look solid, with the company reporting revenue of $754 million, albeit lower than lower lumber prices. Net income was $26 million, and free cash flow remained positive at $33 million. Management reaffirmed its focus on debt reduction and dividend sustainability. Even with softer markets, earnings and free cash flow continue to comfortably cover the payout.
In short
When it comes to long-term thinking, investors need to think essential. For these three dividend stocks, management has remained strong and conservative. That gives these stocks the power to fuel your portfolio for years, if not decades.
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