Want Solid Dividend Income? Look up North

The S&P 500 index has returned nearly 34% in the last year. That's the upside. The downside of this gain, however, is that many large U.S. companies are now paying a lower-than-usual dividend yield. So, it's time to look up -- up north, that is. Canada can offer numerous companies with high dividend yields that are well protected. This article will examine three of our names from north of the border, including: The Bank of Nova Scotia ; Canadian Utilities Limited and Enbridge Inc. . Bank of Nova Scotia: a Safe Bet Bank of Nova Scotia, which is commonly referred to as Scotiabank, is a top-three financial institution in Canada based on assets. The company has nearly 2,600 branches in more than 50 countries around the world. Scotiabank is valued at nearly $76 billion and generated revenue of almost $24 billion in fiscal 2020 (which ended Oct. 31). Scotiabank has a sizeable presence in Canada given its total assets. The company has approximately $300 billion in assets in Canadian dollars, which at the time of writing was about 80 cents to each U.S. buck. It also holds Canada's top spot in the automotive lending market. The company benefits from Canada's very high barriers to entry into the financial market, which limits the competition primarily to the domestic names as foreign banks can only operate if they meet certain restrictions. In addition, Scotiabank has a much more diverse footprint than its Canadian brethren. Just 50% of revenues come from Canada, giving Scotiabank the largest international presence among the five large Canadian banks. While not a clear leader in any foreign market yet, Scotiabank is in the process of building up its presence, which should allow the company ample room to grow. Unlike many of its U.S. counterparts, Scotiabank didn't cut its dividend payment during the 2007 to 2009 recession. In fact, its dividend grew 13% over this period of time. The company did pause its dividend in 2010, but has raised it every year since. The dividend has a compound annual growth rate of almost 6% over the last decade. U.S. investors should receive at least $2.86 per share in 2021. We expect Scotiabank to earn $5.93 per share this year, resulting in a projected payout ratio of 48%. This is just below the company's average payout ratio of 49% over the last decade. Scotiabank is also consistent with its payout ratio. Outside of last year, Scotiabank's payout ratio was in a range of 45% to 51% every year since 2011, illustrating how conservative the company is toward its dividend. Scotiabank currently yields 4.5%, which is 3.5 times the average yield of 1.3% for the S&P 500 index. Scotiabank proved its worth during the last recession when it was able to maintain its dividend even as other U.S. banks were slashing theirs to the bone. Dividend growth has been solid over the last 10 years, the payout ratio very well managed and the company is a major player in the banking industry. These factors should allow Scotiabank to continue to provide higher dividend payments going forward. Canadian Utilities Is Full of Energy Canadian Utilities is a diversified global energy infrastructure corporation with business segments that include electricity, pipelines and liquid and retail energy. It generated revenue of $2.5 billion last year and is valued at $7.8 billion today. Canadian Utilities has a strong footprint with nearly 9,000 kilometers of natural gas pipelines that touch almost 3,700 receipt and delivery points. The company also has 16 compressor sites that touch much of western Canada. Despite being headquartered in Canada, Canadian Utilities has a sizeable international presence. The company has electricity generation, natural gas storage and industrial water infrastructure in Australia, Chile and Mexico in addition to its Canadian business. There are few utility companies in Canada or even in the U.S. that have operations in other countries, setting Canadian Utilities apart from its peer group. The company's business model combined with the need for power and energy even in a recession has helped Canadian Utilities grow its dividend for 49 consecutive years, one of the longest dividend growth streaks among Canadian companies. The dividend has a CAGR of 5.7% since 2011, a solid growth rate for a utility company. Canadian Utilities is expected to distribute dividends of $1.40 per share this year, while earning $1.80 per share, equating to a payout ratio of 78%. For context, the company has an average payout ratio of 77% over the last decade. Investors should be aware that the payout ratio has varied wildly over this period of time, but some of the volatility can be attributed to the exchange rate. Canadian Utilities yields just under 5% at the moment. Utility companies are often prized by investors for their reliable dividends and steady growth rates. Canadian Utilities offers a strong yield and a long track record of raising dividends, something the company is likely to do for years to come due to its business model. Enbridge Should Keep Flowing for Investors Enbridge is a diversified oil and gas company that is one of the largest names in energy in North America. The company has five business units including Liquids Pipelines, Energy Services, Gas Distributions, Green Power and Transmission and Gas Transmissions and Midstream. Enbridge has a market capitalization of just under $80 billion and generated revenue of $29.4 billion in 2020. Enbridge is the dominate player in the oil and gas markets in North America. The company is responsible for moving almost a quarter of the oil in Canada and a fifth of the natural gas in the U.S. This gives Enbridge a size and scale that is nearly unmatched by its peers. Enbridge's network also serves major U.S. cities such as New York City and Boston, areas with high populations and often elevated demand for energy. While pipelines can be capital intensive to build and are often met with resistance from locals and environmentalists, they are less expensive to maintain once in place. Once built, additions are often easier and cheaper to make compared to a competitor creating a whole new system. This favors Enbridge over others given its key pipelines such as Canadian Mainline crude pipeline system. Even with the ups and downs of the energy markets, Enbridge has raised its dividend for 26 consecutive years. Dividends have grown with an annual rate of 12% since 2011, the highest growth rate of any name discussed in this article. Shareholders should see $2.65 of dividends in 2020. With earnings-per-share expected to be $4.03, Enbridge has a projected payout ratio of 66%. This is above the 10-year average payout ratio of 51%, but in-line with the five-year average payout ratio of 63%. Shares yield 6.8% today. Given the importance of the company's position in energy in North America, a healthy payout ratio and a long and successful track record of dividend growth, we believe it is very likely that Enbridge will continue to raise its dividend.

Want Solid Dividend Income? Look up North

Here we take a closer look at the Bank of Nova Scotia; Canadian Utilities Limited and Enbridge Inc.

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