Top quality stocks with 6% dividend yields

In a challenging year for Canadian investors, high quality dividend-paying stocks have even more appeal. Especially those that avoid the impact of tariff wars.

The power of dividends can’t be overstated. The companies that pay them tend to be large, well financed and with a track record of thriving in all economic cycles. Studies show dividends contribute up to 40% of investment gains over the long term.

 The three conservative stocks below fit the bill in terms of size, financial strength, safety and long histories of continuous dividend payments. Their average yield is 7.6% at the time of writing. They are out of the direct line of fire from Trump tariffs, but of course, face whatever turbulence lies ahead in the broader domestic and global economies.  

Crombie REIT (TSX: CRR.UN)

Type: Real estate investment trust unit
Current price: $13.88 Feb. 7
Annual payout: $0.89
Yield: 6.4%
Risk: Low to moderate
Years of consecutive dividends: 19

Comments: Crombie is a real estate investment trust that owns 289 Canadian grocery stores most of which anchor shopping malls.

It is 41.5% owned by Empire Co. which in turn owns Sobey’s, Safeway, and FreshCo who are Crombie’s major tenants.  About 71% of Crombie’s rents are derived from these essential retail stores.  Among Crombie’s pluses are a record high occupancy rate of 96.9% in 2024. This is enhanced by its long-term relationship with its major tenant and largest shareholder Empire. Crombie offers moderate revenue growth from the development of its industrial and residential portfolio.

Crombie’s $0.89 annual dividend is paid monthly and yields 6.6% at current prices. Morningstar Research report gives Crombie a fair value estimate of $15.06, which is 8.5% higher than the current price.

LyondellBasell Industries NV Class A (NYSE:LYB)
Type: American Depository Receipt (ADR)  
 Recent price: US$75.15 (Figures in $US)
Annual payout: US $5.36
Yield: 7%
Consecutive years of dividends: 13  
Risk Rating: Low to moderate

Comments: LyondellBasell is the world’s largest producer of polypropylene which is the feedstock for such things as plastic car parts, packaging and consumer products. It also produces ethylene and polyethylene. These materials are used in a wide variety of things from PVC pipes and plastic siding to medical devices and prosthetics.

More than half of LyondellBasell’s overall production comes from North America. More production will come to North America as it reviews its European operations with an eye to consolidation or sale. These facilities have become less competitive because of the high cost of natural gas which is a core input.  

  LyondellBasell’s sales of $40.3 billion in 2024 were 2% lower than 2023. Net income of $1.4 billion was down 35.5%. Most of the decline was due to non-cash asset write offs related to the costs of exiting the refining business.

 LyondellBasell has increased its annual dividend in each of the last 12 years, averaging increases of about 12.5% per year since 2012. It resumed its share-repurchase program in late 2021 and paid a special dividend in the second quarter of 2022.   

Western Union Co. (NYSE:WU)
Type: US common stock
Current price: $10.82 (figures in US dollars)
Annual payout: $0.94
Yield: 8.5%
Years of consecutive dividends: 18
Risk: Higher

Comments: Western Union provides money transfers through a global network of about 600,000 agents. The company handled over 300 million transactions in 2024 and is the largest money transfer company in the world. It operates in over 200 countries and territories, in 130 currencies.

 Western Union’s recent performance has been weak as it copes with disruption caused by money transfers by cellphone and internet services at cheaper prices. It is responding by investing in its digital transfer platforms.

In countries like Canada with an aging demographic, immigration is a necessity for long-term growth. This trend is a strong tail wind for Western Union. Its size, scale and brand recognition are another strength.

Among the risks are that developing countries change their immigration policies – as Canada has done – which will reduce demand for its services.  Digital money transfers via cellphone using PayPal, Wise or Revolut as examples, are cheaper and easier, eroding its premium pricing.  

The company continues to reward investors. In December, it announced a $1billion stock repurchase program. Its dividend seems secure and has been paid continuously since 2006.

 Morningstar Research estimates a fair value of $17 for the shares, 53% high than its current price.

Western Union reported encouraging year end results Feb. 4 and provided a positive outlook for 2025. Revenue for the year was $4.2 billion, up 0.5% on an adjusted basis. Adjusted earnings per share of $1.74 were 3.6% higher.

This article appeared in a recent issue of the Income Investor.  For information on how to reprint this article please view this page.