The TSX’s big rally over the past year has driven down yields on many stocks, but investors can still get attractive returns from solid companies.
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Enbridge
Enbridge (TSX:ENB) is up about 20% over the past twelve months and has been recovering for over two years.
The stock will benefit from rate cuts in 2024 and 2025, after taking a hit in 2022 and 2023 when the Bank of Canada aggressively raised rates to control inflation.
Enbridge has also been able to drive distributable cash flow growth through a combination of acquisitions and development projects. The current $39 billion capital program is expected to increase adjusted earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted earnings per share (EPS) and distributable cash flow by 5% per year beginning in 2027.
This should support continued dividend increases. Enbridge has increased its dividend in each of the past 31 years. Investors who buy ENB stock at current levels could get a dividend yield of 5.4%.
Enbridge has the size and financial strength to make additional acquisitions as the energy infrastructure sector consolidates. The company would also be a candidate to help build or operate a new major oil pipeline project if the Canadian government decides to support the construction of new capacity to transport oil from Alberta to the coast. Selling to global buyers is part of the national strategy to move away from over-reliance on the U.S. for sales of Canadian energy products.
Bank of Nova Scotia
Bank of Nova Scotia (TSX:BNS) is up 44% over the past twelve months, marking an impressive recovery after underperforming its peers in recent years.
The bank is moving forward with a turnaround plan that will shift its growth strategy from Latin America to the United States and Canada. Bank of Nova Scotia has already invested $2.8 billion to acquire a 14.9% stake in KeyCorp, a US regional bank. This move gives Bank of Nova Scotia a good platform to expand its U.S. presence.
Last year, Bank of Nova Scotia sold its operations in Colombia, Costa Rica and Panama. Investors will want to keep an eye on news updates and earnings reports to see if more revenue is generated in the Latin American operations.
The Bank of Nova Scotia just reported a solid start to fiscal 2026, with adjusted net income for the first quarter of 2026 of $2.70 billion, compared to $2.36 billion in the same time frame last year. The adjusted return on equity (ROE) increased from 11.8% to 13%. A higher ROE is a sign that the strategy reset is going well. This should support the stock’s big move.
Investors who buy BNS stock at the current price can get a dividend yield of 4.25%.
The bottom line
Enbridge and Bank of Nova Scotia pay good dividends that are expected to continue growing. If you’ve got some money to put to work, these stocks deserve to be on your radar.
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