If you are like me, you own stocks in a lot of U.S. companies. That’s not uncommon at all, but it leaves you heavily exposed to just one nation. I purposefully try to own companies with foreign operations, and increasingly, I am including U.S.-listed foreign companies in my portfolio.
You can do that, too, without going too far afield with high-yield Canadian stocks like Bank of Nova Scotia(NYSE: BNS), Brookfield Renewable Partners(NYSE: BEP), and Enbridge(NYSE: ENB). Here’s a look at this trio, which offers yields of as much as 5.8%.
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Bank of Nova Scotia, more commonly referred to as Scotiabank, is one of the largest banks in Canada. Canadian banking regulations are very strict, effectively giving the country’s largest banks protected market positions. The rules have also resulted in Canadian banks being operated in a very conservative fashion relative to U.S. banks. In general, Scotiabank is a relatively low-risk bank operating on a very strong foundation.
That’s the good news that supports the bank’s lofty 4.2% dividend yield. For reference, the average U.S. bank has a yield of 2.5%. Scotiabank’s yield is so large because it has been a bit of a laggard thanks to the company’s investments in Central and South America. When other Canadian banks sought growth in the U.S. market, Scotiabank attempted to differentiate itself by expanding further south.
That didn’t work out as well as planned, with the bank lagging its peers. Management is revamping its approach, getting out of less desirable markets, and focusing on the Mexico, U.S., and Canada trading block. Through partnerships and the acquisition of roughly 15% of KeyCorp, Scotiabank has made significant progress with its turnaround effort.
If you don’t mind taking on a little extra risk, Bank of Nova Scotia could be an attractive financial position for your portfolio. Note, too, that the company has paid dividends since 1833, so the bank and its dividend have clearly stood the test of time. An investment of $1,000 will let you buy 13 shares of the high-yield bank.
One of the most significant changes the world is witnessing today is the transition from carbon-based energy to cleaner alternatives. Although some clean energy advocates would like to see the change take place overnight, the reality is that it will likely take decades to build out the clean energy that is needed. Brookfield Renewable Partners is doing just that, with what appears to be a significant long-term growth opportunity ahead.
The business spans hydroelectric, solar, wind, energy storage, and nuclear power, covering every current clean energy option you might be interested in. And it provides you with a lofty 5.3% yield.
There’s a corporate version called Brookfield Renewable Corporation(NYSE: BEPC) that has a 3.7% yield. The two entities are identical, including the size of the dividend. The only difference is demand for the investment, which is higher for the corporate version because institutional investors are often barred from owning partnerships.
Brookfield Renewable Partners’ distribution has been increased annually for more than a decade. The plan is to keep increasing the distribution at a rate of between 5% and 9% a year for the foreseeable future. If you are looking for an attractive yield backed by an attractive dividend growth rate, Brookfield Renewable Partners could be the right pick for you. A $1,000 investment will get you 36 units of the partnership.
Enbridge is one of the largest midstream operators in North America. It also owns regulated natural gas utilities and renewable power assets, such as offshore wind farms. It seems like an eclectic mix until you understand that one of Enbridge’s key goals is to provide the world with the energy it needs as it needs it. The portfolio primarily reflects the shift from dirtier to cleaner energy sources.
All of the businesses Enbridge operates generate reliable cash flows. That cash is used to support the huge 5.8% yield. The dividend backing that yield has also been increased annually for three decades, highlighting the company’s commitment to rewarding investors for sticking around. If you don’t mind investing in carbon-focused energy stocks, Enbridge could be a good option for you.
A $1,000 investment will net you 21 shares of Enbridge. It’s important to remember that the company is largely a toll-taker in the energy sector, charging fees for the use of its energy infrastructure assets. Volatile oil and natural gas prices don’t have a material impact on the company’s ability to pay its dividend. In other words, this could be a relatively safe way to add energy exposure to your portfolio if that’s what you are looking for.
There are plenty of other Canadian stocks available for purchase on U.S. exchanges, some of which offer higher yields. But Scotiabank, Brookfield Renewable, and Enbridge are three that stand out for their risk versus yield balance. If you are ready to venture beyond the U.S. border, these high-yield investments are a good way to do that without venturing too far afield.
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Reuben Gregg Brewer has positions in Bank Of Nova Scotia, Brookfield Renewable Partners, and Enbridge. The Motley Fool has positions in and recommends Enbridge. The Motley Fool recommends Bank Of Nova Scotia, Brookfield Renewable, and Brookfield Renewable Partners. The Motley Fool has a disclosure policy.
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