If you’re like me, you own shares of many American companies. This is nothing unusual, but it leaves you very exposed to a single nation. I deliberately try to own companies with foreign operations and increasingly include foreign companies that are publicly traded in the United States in my portfolio.
You can also do this without going too far 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 up to 5.8%.
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Bank of Nova Scotia, more commonly known as Scotiabank, is one of the largest banks in Canada. Canadian banking regulations are very strict, effectively giving the country’s largest banks protected positions in the market. The rules have also resulted in Canadian banks operating very conservatively compared to American banks. Overall, Scotiabank is a relatively low-risk bank that operates on a very solid foundation.
That’s the good news behind the bank’s high dividend yield of 4.2%. For reference, the average American bank has a yield of 2.5%. Scotiabank’s performance is so great 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 to grow in the US market, Scotiabank attempted to differentiate itself by expanding further south.
That didn’t work as well as planned, and the bank fell behind its peers. The administration is renewing its approach, exiting less desirable markets and focusing on the Mexico-U.S.-Canada trading bloc. Through partnerships and the acquisition of approximately 15% of KeyCorpScotiabank has made significant progress in its recovery 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 also that the company has paid dividends since 1833, so the bank and its dividends have clearly stood the test of time. An investment of $1,000 will allow you to purchase 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 the change to happen overnight, the reality is that it will likely take decades to develop the clean energy 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 all current clean energy options that may interest you. And it provides you with a high yield of 5.3%.
There is a corporate version called Brookfield Renewable Corporation(NYSE: BEPC) which has a yield of 3.7%. The two entities are identical, including the size of the dividend. The only difference is the demand for the investment, which is higher for the corporate version because institutional investors are often prohibited from owning companies.
Brookfield Renewable Partners’ distribution has increased annually for more than a decade. The plan is to continue increasing distribution at a rate of between 5% and 9% annually for the foreseeable future. If you’re looking for an attractive yield backed by an attractive dividend growth rate, Brookfield Renewable Partners could be the right choice for you. With an investment of $1000 you will get 36 units of the company.
Enbridge is one of the largest midstream operators in North America. It also owns regulated natural gas services and renewable energy 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 when it needs it. The portfolio primarily reflects the shift from dirtier to cleaner energy sources.
All businesses Enbridge operates generate reliable cash flows. That cash is used to support the whopping 5.8% yield. The dividend supporting that performance has also been increased annually for three decades, underscoring 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.
An investment of $1,000 will get you 21 shares of Enbridge. It is important to remember that the company collects tolls heavily in the energy sector and charges fees for the use of its energy infrastructure assets. Volatile oil and natural gas prices do not 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’re looking for.
There are many other Canadian stocks available for purchase on US exchanges, some of which offer higher yields. But Scotiabank, Brookfield Renewable and Enbridge are three that stand out for their balance between risk and return. If you’re ready to venture beyond the American border, these high-yield investments are a good way to do so without venturing too far.
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Reuben Gregg Brewer holds positions at Bank Of Nova Scotia, Brookfield Renewable Partners and Enbridge. The Motley Fool has posts on Enbridge and recommends it. The Motley Fool recommends Bank Of Nova Scotia, Brookfield Renewable and Brookfield Renewable Partners. The Motley Fool has a disclosure policy.
Three High-Performing Canadian Stocks to Buy with $1,000 and Hold Forever was originally published by The Motley Fool
