5 hot TSX income stocks for August 2020

Summary

• Income stocks pay consistent dividends to shareholders and have high dividend yields.
• These are stocks of well-established and resilient companies that continue to thrive in recession such as utility and consumer staple segments.
• We look at five trending income stocks on the TSX: Bank of Nova Scotia, Pembina Pipeline, TC Energy Corporation, Shaw Communications, and TransAlta Renewables.
• These five hot stocks have paid regular dividends to shareholders ranging between C$ 0.07 to C$ 0.9.
• At the time of this writing this report, all the five stocks offered attractive dividend yields of 4.5 per cent or higher.

Income stocks pay consistent income to shareholders in the form of dividends. These are often well-established companies with matured businesses and a steady cash stream. The stocks have high dividend yields and tend to be among the least volatile in the equity space, proving to be safe bets in bear market cycles.

Utility and consumer staple companies are some typical examples of income stocks. The products or services offered by these companies are counted among essentials.

The Toronto Stock Exchange (TSX) is home to a wide range of companies, offering Canadian investors an opportunity to invest in income-driven companies thriving on the home turf. However, in the midst of a pandemic economy, most organizations are snipping dividends. Investors need to seek resilient businesses with the financial fortitude to survive a recession.

Here are five trending income stocks from the Toronto Stock Exchange in the month of August:

Pembina Pipeline (TSX:PPL)

The energy infrastructure company paid out C$ 0.21 monthly dividends and has an impressive dividend yield of 7.117 per cent. The C$ 19 billion-company has a price-earnings (P/E) ratio of 20.10 and EPS of C$ 1.76.

The pandemic-led market crash eroded 26 percent of the scrips’ value this year. Its stocks are trading flat over a quarter and has advanced by nearly 5 per cent this year.

Pembina Pipeline’s net revenues surged to C$ 776 million year-over-year in Q2 from C$ 758 million. Adjusted EBITDA in Q2 also grew to C$ 789 million YoY from C$ 765 million last year. The midstream energy company is working on projects worth C$ 810 million that will go live by the end of 2021.

Bank of Nova Scotia (TSX:TNS)

The third-largest Canadian lender has a sweet dividend yield of over 6.363 per cent and distributed C$ 0.9 quarterly dividends. Its current market cap is C$ 68.5 billion and holds a P/E ratio of 9.30 and C$ 6.16 EPS.

Bank of Nova Scotia (also known as Scotia Bank) has paid consistent dividends to investors since 1833. Apart from Canada, the bank has a strong presence in international markets and a stable financial business.

The lender has been hit hard by the coronavirus pandemic, its scrips shedding 21 per cent value this year. The stocks have recovered by 12 percent in three months and are mostly trading flat in a month.

TransAlta Renewables (TSX:RNW)

The electric utility company’s dividend yield stands at an impressive near 6 per cent. It pays monthly dividends of C$ 0.07833 and has a P/E ratio 40.20. The company is valued at C$ 4.2 billion and has an EPS of C$ 0.39.

TransAlta stocks are trading flat this year. On the quarterly and monthly scales, the shares have advanced by 13 per cent and 8.6 per cent, respectively.

The company’s EBITDA surged by 4 percent year-on-year to C$ 115 million in the second quarter of 2020. It had C$ 498 million in liquidity at the end of the quarter including C$ 29 million cash in hand.

The company has 19 wind farms, 13 hydro facilities and one natural gas plant.

TC Energy Corporation (TSX:TRP)

The energy infrastructure company paid quarterly dividends of C$ 0.81 and has a current dividend yield of nearly 5 per cent. It is valued at C$ 60.9 billion and has current P/E ratio of 14.30 and EPS of C$ 4.56.

Its stocks have gained by 7.7 per cent in a month and nearly 6 per cent in three months. The scrips are down by nearly 6 per cent YTD. The Alberta-based energy company has doubled its dividend payments in a decade.

In the second quarter 2020, the company’s net income grew by 13.8 per cent to C$ 1.3 billion from C$ 1.1 billion in the same period last year. It ended the quarter with C$ 11 billion liquidity.

Shaw Communications (TSX: SJR.B)

Shaw Communications has a current dividend yield of 4.714 per cent and pays monthly dividends of C$ 0.09875. Its P/E ratio is 19.30 and earnings per share (EPS) is C$ 1.30. The company’s current market capitalization is C$ 12.3 billion and it regularly ranks among top dividend stocks on the TSX.

Its stock price has slipped by 4.81 per cent this year. But the shares have recovered well since the pandemic-led market crash in March, posting 1.7 per cent gains in a month and 11+ percent rise in three months.

Shaw Communications is among the largest internet, landline and television services providers in Canada.