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Market turmoil following a looming recession has kept some investors on the sidelines. Some stocks have obviously held up better than others. If you have an extra $1,000, you might want to consider these all-weather dividend stocks that have been relatively resilient and are excellent defensive candidates for buy and hold.
A strong utility stock paying growing dividends
Interested investors can buy Brookfield Infrastructure Partners (TSX:BIP.UN)(NYSE:BIP), which pays cash distributions or the corporate version which pays dividends. The latter trades under the symbol BIPC on the TSX and NYSE and tends to trade at a premium to its limited partnership counterpart. As of Friday’s market close, BIPC was trading at an 11% premium on both exchanges.
Anyway, the company is quality. The dividend-paying stock has started paying an increasing dividend since 2008. It can be a little confusing to view its cash distribution history on the company’s website, as the stock has had a number of stock splits. actions along the way, which increased the number of actions. for long-term shareholders (and lowered the share price at the time) and one of whom sold the shares of the company.
For reference, its 10-year dividend growth rate is around 9.9%, while its most recent increase was 5.88% in the first quarter of 2022. Management is dedicated to increasing the cash distribution by 5 at 9% per annum, supported by the corresponding operating funds. (FFO) growth. Therefore, BIP aims to maintain a healthy FFO payout of 60-70%.
BIP’s cash flow benefits from high inflation as approximately 70% of its cash flow is indexed to inflation. Moreover, given that approximately 90% of its cash flows are regulated or contracted, it generates quality cash flows. It is a global investor and operator of fabulous cash cow assets with high barriers to entry. It focuses on utility, transport, intermediary and data infrastructure.
TSX: BIP.UN is about 13% below its 52-week high and is currently yielding nearly 3.8%. 12 analysts have a consensus 12-month price target of around US$46.90 on the stock, which represents a discount of more than 18%. Assuming no valuation expansion, estimated annualized returns can be around 9-13%.
TELUS is another defensive dividend stock
TELUS (TSX:T)(NYSE:TU) is another all-weather dividend stock you can trust. It has been paying increasing dividends for about 18 years. Like BIP, the major Canadian telecom company benefits from quality cash flows. Specifically, a significant portion of TELUS’ revenue is recurring, coming from its television, Internet and data plan subscriptions.
Changes in economic health have little impact on its profits, as people cannot live without their internet and cell phones. TELUS will also benefit from an increase in population in the areas it serves. Mainly, telecommunications operates in Alberta and British Columbia.
The recent payout ratio for dividend-paying stocks was 64% of earnings. It also has a reserve of retained earnings that can cover nearly four years of dividend payments. Importantly, TELUS earnings are expected to grow at a double-digit rate, which should lead to continued dividend growth.
For reference, the telecom stock’s 10-year dividend growth rate is 8.7%, while its one-year growth rate is around 7.3%. It currently offers a competitive yield of almost 4.7%.
The defensive stock is down about 17% from its 52-week high and is trading at a discount of about 15%.