Avoid Brookfield Renewable On TSX And Consider One Better Dividend Stock Option
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Dividend stocks can be a key component of an income-focused investment portfolio, offering the allure of regular payouts. However, it's crucial to assess the sustainability of these dividends. Companies with high payout ratios may not sustain their dividend payments over time, potentially leading to financial strain or reduced dividend yields in the future. In this article, we will explore two Canadian stocks: one that presents a robust dividend opportunity and another—Brookfield Renewable—that might pose risks due to its high payout ratio.
Top 10 Dividend Stocks In Canada
| Name | Dividend Yield | Dividend Rating |
| Bank of Nova Scotia (TSX:BNS) | 6.83% | ★★★★★★ |
| Whitecap Resources (TSX:WCP) | 7.13% | ★★★★★★ |
| Boston Pizza Royalties Income Fund (TSX:BPF.UN) | 8.43% | ★★★★★☆ |
| Enghouse Systems (TSX:ENGH) | 3.37% | ★★★★★☆ |
| Secure Energy Services (TSX:SES) | 3.29% | ★★★★★☆ |
| Royal Bank of Canada (TSX:RY) | 3.80% | ★★★★★☆ |
| Firm Capital Mortgage Investment (TSX:FC) | 8.89% | ★★★★★☆ |
| Russel Metals (TSX:RUS) | 4.57% | ★★★★★☆ |
| Canadian Western Bank (TSX:CWB) | 3.16% | ★★★★★☆ |
| Canadian Natural Resources (TSX:CNQ) | 4.22% | ★★★★★☆ |
Click here to see the full list of 33 stocks from our Top TSX Dividend Stocks screener.
Here we highlight one of our preferred stocks from the screener and one that could be better to shun.
Top Pick
Enghouse Systems
Simply Wall St Dividend Rating: ★★★★★☆
Overview: Enghouse Systems Limited, a global enterprise software solutions provider, has a market capitalization of approximately CA$1.69 billion.
Operations: The company generates revenue through two main segments: the Asset Management Group, which brought in CA$180.88 million, and the Interactive Management Group, with revenues of CA$299.55 million.
Dividend Yield: 3.4%
Enghouse Systems Limited has demonstrated solid financial performance with a significant increase in revenue and net income as reported in its recent earnings for Q2 2024. The company maintains a healthy dividend policy, evidenced by the recent affirmation of a CA$0.26 quarterly dividend per share, underpinned by a sustainable payout ratio of 65.7% and cash payout ratio of 45.8%, ensuring dividends are well-covered by both earnings and cash flows. This contrasts sharply with companies facing challenges due to high payout ratios, highlighting Enghouse's prudent financial management and reliability as a dividend stock despite its lower yield compared to the market's top payers.