Rising global inflation worries tied to higher oil and food costs have pushed many investors toward cash. Canadian dividend stocks with yields above 3%, backed by well covered and steadily growing payouts, offer a different way to seek resilience. You get potential income today, along with the comfort of companies that have kept dividends on a stable track. This article highlights three such dividend payers from Canada.
The three stocks highlighted here offer a compelling starting point if you want exposure to well covered, growing dividend income streams above 3%. However, if you want the standouts, these 3 dividend aristocrats stocks are the most outstanding.
Overview: Magna International supplies automakers worldwide with vehicle components and complete car assembly, with growing emphasis on EV battery enclosures and ADAS systems.
Operations: Magna generates most of its revenue from Body Exteriors & Structures at US$16.9b and Power & Vision at US$15.7b, with Seating Systems and Complete Vehicles contributing US$5.9b and US$4.7b respectively.
Magna International fits the Dividend Powerhouses theme because its 3%+ yield is anchored to businesses tied to long term EV and driver assistance demand, rather than only mature legacy lines.
“Magna International is focusing on operational excellence and restructuring actions, which are expected to result in meaningful margin expansion over the next two years. This is likely to positively impact net margins and earnings.”
What happens if one unresolved pressure on cash generation shifts just as those efficiency gains start to feed through to dividend decisions?
If that pressure point on cash interests you, read the full narrative for Magna International to see how Magna International’s dividend story could accelerate or stall from here.
Overview: Freehold Royalties collects royalty income from oil, natural gas and liquids across Canadian and US properties. This provides top line cash flows that underpin its high dividend.
Operations: Freehold Royalties generates CA$322 million from oil and gas exploration and production royalties, split between CA$157 million in Canada and CA$165 million in the United States.
Freehold Royalties matters for a 3%+ dividend screen because its royalty structure is built to skim cash directly from production rather than depend on heavy operating spend.
“Freehold leases its mineral rights (Mineral Title) or gross overriding royalty (GORR) to third-party operators and receives a “top-line” share of each barrel of oil or gas produced.”
