Dividend stocks can be excellent long-term investments, offering investors the potential for both capital appreciation and a steady stream of dividend income. Reinvesting these payouts can further accelerate wealth creation by harnessing the power of compounding. In addition, companies with established business models and stable, predictable cash flows can maintain and grow their dividends through different market cycles. This resilience can help reduce portfolio volatility while providing investors with a reliable source of passive income.
Against this backdrop, let’s look at two high-yield dividend stocks that I believe are well positioned to deliver attractive long-term returns.
Enbridge
Enbridge (TSX: ENB) is an excellent stock for long-term investors, backed by its highly contracted business model, consistent dividend growth, attractive yield, and healthy growth prospects. The diversified energy infrastructure company generates approximately 98% of its earnings from long-term take-or-pay contracts and regulated assets. In addition, its inflation-indexed mechanisms protect a significant portion of earnings from rising costs. This resilient business model enables Enbridge to generate stable cash flows across different economic environments, supporting more than 70 years of uninterrupted dividend payments. The company has also increased its dividend for 31 consecutive years and currently offers a forward yield of 5.57%.
Meanwhile, rising oil and natural gas production across North America should continue to drive demand for Enbridge’s energy infrastructure and services. To capitalize on this favourable trend, the company is expanding its asset base through a $41 billion secured capital program, with projects expected to enter service through the end of this decade. These investments could support annualized adjusted EPS (earnings per share) and cash flow growth of approximately 5%, providing a solid foundation for continued dividend growth. Furthermore, Enbridge plans to return approximately $40 billion to $45 billion to shareholders over the next five years, underscoring management’s confidence in its cash-flow generation and supporting the sustainability of future payouts.
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SmartCentres Real Estate Investment Trust
Another high-yield dividend stock that could appeal to income-seeking investors is SmartCentres Real Estate Investment Trust (TSX: SRU.UN), which owns and operates 201 strategically located properties across Canada. The REIT also benefits from a high-quality tenant base, with approximately 95% of tenants having a regional or national presence and 80% providing essential services. Its well-located properties, long-term leases, and well-established tenant base support consistently strong occupancy and rent collection rates. Meanwhile, consistent lease renewals at higher rates and ongoing lease-up activity could further support cash flows and distributions. SmartCentres currently pays a monthly distribution of $0.15417 per unit, translating into an attractive forward yield of 6.76%.
Looking ahead, growing economic activity and limited new supply, partly due to rising construction costs, should support demand for retail space. Amid the favorable environment, SmartCentres is also expanding its portfolio, with approximately 0.8 million square feet of retail, self-storage, mixed-use, commercial, office, and industrial properties under construction. In addition, roughly 87 million square feet of future development is at various stages of planning and development. These projects provide a substantial runway for long-term growth and could support continued distribution growth. Given its strong portfolio, resilient tenant base, attractive yield, and development pipeline, I believe SmartCentres is well positioned to continue rewarding unitholders with healthy monthly distributions.