2 High-Yield Dividend Stocks I’d Buy With $10,000 Right Now

Do you have $10,000 and want income now? If that’s the case, there are two Canadian energy stocks that stand out for investors willing to accept some commodity-price risk in exchange for meaningful monthly cash flow. Those are Peyto Exploration & Development (TSX:PEY) and Whitecap Resources (TSX:WCP).

Both companies generate strong cash flow, pay monthly dividends, and have worked to keep their balance sheets in decent shape. For an income-focused portfolio, that makes them worth a closer look today.

PEY

Peyto stock, an Alberta Deep Basin natural gas producer, has become one of the more interesting income stocks in Canadian energy. The company recently raised its monthly dividend by 9% to $0.12 per share, working out to $1.44 annually, yielding 5.9% at writing.

The latest quarter was strong. Peyto stock reported record first-quarter production of 147,513 barrels of oil equivalent per day (boe/d), up 10% from last year. Funds from operations (FFO) reached $293 million, while free funds flow came in at $139.7 million. The company also reduced net debt by $89.2 million during the quarter.

That’s right, Peyto stock didn’t just raise the dividend after a good headline quarter. It grew production, generated free cash flow, paid shareholders, and still reduced debt. That gives the dividend more credibility.

Peyto stock also benefits from a low-cost structure and hedging. Natural gas prices can be brutal, especially in Western Canada, but Peyto’s market diversification and hedging program help protect cash flow. That doesn’t remove risk, but it gives investors some comfort.

WCP

Whitecap Resources is the broader energy play. The company produces oil and natural gas across Western Canada, with a large liquids-weighted production base. It pays a monthly dividend of $0.0608 per share, or $0.7296 annually, for a yield of around 4.7% at writing.

Whitecap’s first quarter showed why the stock deserves attention. Funds flow topped $1 billion, while free funds flow reached $349 million. Production averaged a record 391,416 boe/d. Management also increased its 2026 production guidance while keeping its capital budget unchanged. More production without a higher capital budget points to better efficiency. Whitecap also ended the quarter with a net debt to annualized funds flow ratio of just 0.8 times, which gives the company flexibility.

Whitecap has already paid billions in dividends over time, and the current monthly payout gives investors a steady income stream. The yield isn’t as high as some risky energy names, but it looks more sustainable because the company still has room to invest, reduce debt, and return cash.

Bottom line

The risk for both stocks is obvious: commodity prices. If natural gas prices weaken, Peyto stock can fall. If oil prices drop, Whitecap can feel pressure. Costs, drilling results, weather, pipeline access, and regulatory issues can also affect returns.

Still, the setup looks attractive. Peyto stock gives investors higher natural gas exposure and a recently increased monthly dividend. Whitecap adds scale, oil exposure, strong free funds flow, and a steady monthly payout. For investors willing to accept energy sector volatility, I’d consider splitting $10,000 between the two. In fact, here’s what that could bring in at writing.

COMPANYRECENT PRICENUMBER OF SHARESANNUAL DIVIDENDANNUAL TOTAL PAYOUTFREQUENCYTOTAL INVESTMENTWCP$15.57321$0.73$234.33Monthly$4,997.97PEY$24.34205$1.44$295.20Monthly$4,989.70

The income is useful today, and the cash-flow strength gives both stocks a solid shot at rewarding shareholders for years.

The post 2 High-Yield Dividend Stocks I’d Buy With $10,000 Right Now appeared first on The Motley Fool Canada.

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More reading

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• How $20,000 Across 4 TSX Stocks Could Deliver $1,000 in Passive Income
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• How to Turn a $14,000 TFSA Into a Cash-Generating Machine

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.