In this article, we discuss 11 best Canadian dividend stocks for income investors. You can skip our detailed analysis of dividend stocks and their performance over the years, and go directly to read 5 Best Canadian Dividend Stocks For Income Investors.
Inflation is hammering the globe and Canada is no exception. Inflation in Canada picked up speed last year, reaching its 40-year high and averaging 6.8%. The Canadian stock market became victim to growing inflation and rising rates as its benchmark index fell by 8.5%, as of December 30, 2022. However, this decline was insignificant in contrast to an 18.1% loss in the S&P 500 last year. The S&P/TSX Composite Index is up 5.6% year-to-date.
Though the Canadian stock market remained on a strong footing last year compared with its American counterpart, the recent collapse in the banking sector created havoc all over again. According to a report by Financial Post, some of the Canadian top banks’ stocks lost nearly $20 billion in market capitalization following the Silicon Valley Bank collapse in March. According to analysts, banks with acquisitions in the US could topple in the coming months. In addition to this, analysts are also expecting the Canadian economy to dip this year. In our article 10 High-Growth Canadian Dividend Stocks to Invest In, we mentioned data that suggests that a recession in the US will affect Canadian economic growth for three consecutive quarters, with a 0.9% expected overall contraction.
Considering the current market outlook, investors are favoring dividend equities to stay afloat during this period.
Dividend investment also involves investing steadily in dividend-focused exchange-traded funds as they hold a diversified portfolio of dividend-paying stocks across different sectors and industries. Moreover, dividend ETFs also offer investors a steady stream of income, which is their main focus in today’s market environment. Danielle LeClair, director of Manager Research for Morningstar Canada, spoke with the financial services company and highlighted the significance of these funds for income investors. Here are some comments from the analyst:
“Dividend and income funds have been popular options for Canadian investors because they offer an alternative to traditional fixed income products, which have faced challenges in the lower interest rate environment we have seen the last few years.”
Dividend stocks in Canada are also generating positive returns this year. S&P/TSX Canadian Dividend Aristocrats Index, which tracks the performance of Canadian companies that have raised their dividends for at least five years, is up 3.79% year-to-date, as of May 7. In comparison, S&P 500 Dividend Aristocrats delivered a 2.35% return to shareholders since the start of the year.
While US dividend stocks like The Procter & Gamble Company (NYSE:PG), Johnson & Johnson (NYSE:JNJ), and AbbVie Inc. (NYSE:ABBV) are popular among investors, Canadian dividend stocks are also reliable options for income investors. In this list, we will take a look at the best Canadian dividend stocks.
11 Best Canadian Dividend Stocks For Income Investors
For this article, we scoured the list of S&P/TSX Canadian Dividend Aristocrats Index, which includes Canadian companies with at least five years of dividend growth track records. From that list, we selected stocks that are traded on American stock exchanges and sorted them by the number of hedge fund holders in our database that also had positions in those companies at the end of Q4 2022. This means that these Canadian companies are the most famous among hedge fund investors. The stocks are ranked in ascending order of the number of funds that have stakes in them as of Q4.
Best Canadian Dividend Stocks For Income Investors
Manulife Financial Corporation (NYSE:MFC) is a Canadian multinational insurance company that also provides a wide range of financial services to its consumers. The company currently offers a quarterly dividend of C$0.365 per share, having raised it by 11% in February this year. This was the company's tenth consecutive year of dividend growth, which makes it one of the best dividend Canadian stocks on our list. The stock has a dividend yield of 5.43%, as of May 7.
Manulife Financial Corporation (NYSE:MFC) is popular among income investors because of its consistent dividend growth like some US dividend stocks like The Procter & Gamble Company (NYSE:PG), Johnson & Johnson (NYSE:JNJ), and AbbVie Inc. (NYSE:ABBV).
In FY22, Manulife Financial Corporation (NYSE:MFC) reported a net income of $7.3 billion, up $0.2 billion from the same period last year. The company's remittances for the year amounted to roughly $7 billion, compared with $4.4 billion in 2021.
In February, Barclays appreciated the quarterly earnings of Manulife Financial Corporation (NYSE:MFC) and raised its price target on the stock to C$31 with an Overweight rating on the shares.
As of the close of Q4 2022, 10 hedge funds tracked by Insider Monkey reported having stakes in Manulife Financial Corporation (NYSE:MFC), compared with 14 in the previous quarter. These stakes have a collective value of over $118.4 million.
Harding Loevner mentioned Manulife Financial Corporation (NYSE:MFC) in its Q2 2022 investor letter. Here is what the firm has to say:
“Manulife Financial Corporation (NYSE:MFC), the Canadian life insurer operating primarily in North America and Asia, is a new holding. Manulife offers a full suite of life insurance products as well as retirement and wealth management services. While the wealth management and retirement products appeal to the aging populations of the Western world, long-term life insurance products address the needs of the growing number of middle-class families in places like China and southeast Asia. COVID-19-induced lockdowns in China brought the shares down to a significant discount to our estimate of long-term value. The holding now serves as a nice diversifier to our Asia-centered insurers AIA and Ping An.”
Fortis Inc. (NYSE:FTS) is an international diversified electric utility holding company with operations in Canada, the US, and Central America. In the first quarter of 2023, the company reported net earnings of $437 million, up from $350 million during the same period last year. Its capital expenditures for the quarter came in at nearly $1 billion.
Fortis Inc. (NYSE:FTS), one of the best dividend Canadian stocks on our list, currently pays a quarterly dividend of C$0.565 per share. The company has rewarded shareholders with increasing dividends for the past 49 years in a row. The stock's dividend yield on May 7 came in at 3.71%.
Following the company's recent quarterly earnings, Street analysts are giving positive ratings to Fortis Inc. (NYSE:FTS). In May, both Raymond James and CIBC raised their price targets on the stock to C$65 and C$61, respectively.
At the end of Q4 2022, 11 hedge funds in Insider Monkey's database owned stakes in Fortis Inc. (NYSE:FTS), the same as in the previous quarter. However, the consolidated value of these stakes is over $655 million, compared with $634.2 million in Q3 2022.
Pembina Pipeline Corporation (NYSE:PBA) is a Canadian pipeline transport company that also specializes in natural gas businesses. On May 4, the company declared a 2.3% hike in its quarterly dividend to C$0.6675 per share. This marked the company's seventh consecutive year of dividend growth. The stock has a dividend yield of 6%, as recorded on May 7. It is among the best dividend Canadian stocks on our list.
In April, Credit Suisse maintained a Neutral rating on Pembina Pipeline Corporation (NYSE:PBA) with a C$53 price target, appreciating the company's overall performance this year.
In the first quarter of 2023, Pembina Pipeline Corporation (NYSE:PBA) reported an adjusted operating cash flow of $634 million, and its revenue came in at nearly $2.3 billion.
As per Insider Monkey's Q4 2022 database, 15 hedge funds owned stakes in Pembina Pipeline Corporation (NYSE:PBA), compared with 17 in the previous quarter. These stakes are collectively valued at nearly $78.4 million. Among these hedge funds, Two Sigma Advisors owned the largest stake in the company, worth nearly $20 million.
The Toronto-Dominion Bank (NYSE:TD) is a multinational banking and financial services company, based in Toronto, Canada. In May, Credit Suisse maintained a Neutral rating on the bank with a C$88 price target, as the company announced the termination of its merger with First Horizon.
On March 2, The Toronto-Dominion Bank (NYSE:TD) declared a quarterly dividend of C$0.96 per share, which was in line with its previous dividend. The company is one of the best dividend Canadian stocks on our list as it maintains a nine-year streak of consistent dividend growth. The stock's dividend yield on May 7 came in at 4.58%.
As of the close of Q4 2022, 17 hedge funds in Insider Monkey's database owned stakes in The Toronto-Dominion Bank (NYSE:TD), with a collective value of over $185.6 million. With over 1.4 million shares, D E Shaw was the company's leading stakeholder in Q4.
A Vancouver-based telecommunications company, TELUS Corporation (NYSE:TU) is next on our list of the best dividend Canadian stocks. On May 4, the company announced a 3.6% hike in its quarterly dividend to C$0.3636 per share. It has been raising its dividends consistently since 2004. The stock has a dividend yield of 5.11%, as of May 7.
In May, TD Securities raised its price target on TELUS Corporation (NYSE:TU) to C$33 and maintained a Buy rating on the shares, appreciating the company's recent quarterly earnings.
At the end of Q4 2022, TELUS Corporation (NYSE:TU) was a part of 17 hedge fund portfolios, as per Insider Monkey's database. The stakes owned by these elite funds have a collective value of over $255 million.
Royal Bank of Canada (NYSE:RY) is a Toronto-based multinational financial services company. The company offers a quarterly dividend of C$1.32 per share, having raised it by 3% in November 2022. That marked the company's tenth consecutive year of dividend growth, which makes it one of the best dividend Canadian stocks on our list. The stock has a dividend yield of 3.98%, as of May 7.
Royal Bank of Canada (NYSE:RY) can be added to dividend portfolios alongside some US dividend stocks like The Procter & Gamble Company (NYSE:PG), Johnson & Johnson (NYSE:JNJ), and AbbVie Inc. (NYSE:ABBV).
The number of hedge funds tracked by Insider Monkey owning stakes in Royal Bank of Canada (NYSE:RY) grew to 17 in Q4 2022, from 14 in the previous quarter. The collective value of these stakes is over $147.2 million.
