High-yield stocks show promise despite S&P/TSX Composite High Dividend Index dip

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High-yield stocks show promise despite S&P/TSX Composite High Dividend Index dip
Credit: © Reuters.

In spite of a 2.4% fall in the S&P/TSX Composite High Dividend Index, certain high-yield stocks are presenting investment opportunities. Whitecap Resources (OTC: SPGYF ), an energy stock with a robust 6.8% dividend yield and a $1.3 billion debt, has fortified its position by increasing its monthly dividend by 327% since 2021. The firm plans to return 75% of its cash to shareholders and trades for 5.8 times earnings and 9.3 times free cash flow, while maintaining a net debt-to-EBITDA ratio of 0.6 times.

Telecommunications stock TELUS, despite grappling with post-pandemic cost structure challenges and an unfunded dividend, offers a 6% yield. The company aims to bolster its cash flow by curtailing its capital expenditure program, necessitating faith in the management's strategies.

BSR REIT, which has faced a 16% drop in 2023, is expected to witness solid FFO per unit growth this year. The firm trades at a 40% discount to its estimated private market value and owns 31 garden-style apartment complexes in the U.S. Sunbelt region, positioning it as a potential acquisition target.

Pembina Pipeline (NYSE: PBA ), operating a sizable midstream and pipeline business in Western Canada, offers over a 6% dividend yield and displays strong balance sheet flexibility.

Whitecap Resources (TSX:WCP) is noteworthy for its significant monthly dividend increase since 2021 and plans to return 75% of its cash to shareholders. TELUS (TSX:T) is implementing cost control measures and aims to reduce its capital expenditure program, even as it faces rising interest rates and an elevated cost structure. BSR REIT (TSX:HOM.UN) trades at a 40% discount to its estimated private market value, suggesting it could be an acquisition target soon. Lastly, Pembina Pipeline (TSX:PPL (NYSE: PPL )) maintains a robust balance sheet and growing dividend, yielding over 6%.

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