In this article, we discuss 12 best Canadian dividend stocks for income investors. You can skip our detailed analysis of the Canadian stock market and the past performance of Canadian dividend stocks, and go directly to read5 Best Canadian Dividend Stocks For Income Investors.
Canada's primary stock index concluded the year 2023 on a positive note, driven by a surge in energy and financial stocks. Despite facing challenges from inflationary pressures, Canadian stocks rebounded from the declines experienced the previous year, posting an 8% gain for the year. For 2024, there is renewed optimism among investors for a potential interest rate cut by the Bank of Canada. Apart from the general performance of the stock market, Canadian dividend stocks also demonstrated robust results in the previous year. The S&P/TSX Canadian Dividend Aristocrats Index is crafted to assess the performance of companies listed in the S&P Canada BMI that adhere to a consistent dividend policy of either maintaining or increasing dividends annually for a minimum of five years. In the year 2023, this index recorded a positive growth of 5.07%. This indicates that the selected companies, renowned for their commitment to stable or rising dividend payouts, collectively experienced a favorable performance over the course of the year.
Analysts predict that the impressive performance of dividend stocks is poised to persist into 2024. They express confidence in the outlook for dividend stocks in Canada, asserting that the current opportunities are unparalleled in recent history. A key factor contributing to this optimistic outlook is the presence of stable, low-volatility blue-chip companies that are currently providing enticing yields. These companies, characterized by their reliability and strong market position, are seen as a driving force behind the continued appeal of dividend stocks, making them particularly attractive to investors seeking both stability and attractive returns. Noah Solomon, who serves as the Chief Investment Officer at Outcome Metric Asset Management, discussed Canadian dividend stocks in a recent interview with Wealth Professional, an online information resource catering to Canadian advice and planning professionals. Here are some comments from the analyst:
“Canadian dividend stocks are offering yields of between 6.5% and 7.5%, which are tax-preferred because they’re Canadian companies. That’s like a bond equivalent yield approaching 10%.”
Mr. Solomon's perspective on Canadian dividend stocks aligns with that of seasoned fund manager Tom Czitron, who remains optimistic about dividend stocks as a sound long-term investment. Czitron mentioned that the era of inexpensive capital costs and malinvestment is coming to an end, signaling potential challenges for flashy growth stocks. In this shifting landscape, Czitron emphasizes the increasing significance of dividends, suggesting that they will play a more pivotal role than before. He even provides specific recommendations for purchase during the ongoing market downturn.
Canadian dividend stocks have not only demonstrated robust performance in the recent past but have also maintained consistency over the years. As highlighted in a report from RBC Global Asset Management, investors benefiting from dividends experienced a significant boost in their purchasing power. Over the last two decades, dividends in the Canadian market have shown an annual growth rate of approximately 7.9%. In contrast, inflation has averaged an annual rate of 2.2%. When compounded over time, this has resulted in a remarkable 361% growth in dividends, while inflation has led to a comparatively modest 53% increase in prices. This data underscores the enduring strength and value that Canadian dividend stocks have provided to investors.
Although U.S. dividend stocks such as The Procter & Gamble Company (NYSE:PG), Johnson & Johnson (NYSE:JNJ), and AbbVie Inc. (NYSE:ABBV) enjoy popularity among investors, Canadian dividend stocks are equally regarded as dependable choices for income-focused investors. In this article, we will explore some of the best dividend Canadian stocks.
12 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 Q3 2023. This means that these Canadian companies are the most famous among hedge fund investors. The companies mentioned below also have strong dividend histories and healthy balance sheets, which make them reliable investment options for income investors. The stocks are ranked in ascending order of the number of funds that have stakes in them as of Q3. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.
Pembina Pipeline Corporation (NYSE:PBA) is a Canadian energy transportation and midstream service provider. The company operates in the energy infrastructure sector and is involved in the transportation, storage, and processing of energy-related products. The company currently pays a quarterly dividend of $0.6675 per share and has a dividend yield of 5.67%, as of January 30. It is among the best Canadian dividend stocks on our list.
Though American stocks such as The Procter & Gamble Company (NYSE:PG), Johnson & Johnson (NYSE:JNJ), and AbbVie Inc. (NYSE:ABBV) are all the rage among investors, Canadian stocks also offer reliable investment options for income investors.
At the end of Q3 2023, 11 hedge funds tracked by Insider Monkey reported having stakes in Pembina Pipeline Corporation (NYSE:PBA), compared with 15 in the previous quarter. The collective value of these stakes is over $91 million. With over 1.1 million shares, Millennium Management was the company's leading stakeholder in Q3.
Fortis Inc. (NYSE:FTS) is a utility holding company with operations in the electric and gas utility sectors. The company owns and operates electric utilities that generate, transmit, and distribute electricity to residential, commercial, and industrial customers. In December 2023, the company declared a quarterly dividend of C$0.59 per share, which was in line with its previous dividend. Overall, it has been growing its dividends for the past 50 consecutive years, which makes FTS one of the best Canadian dividend stocks on our list. The stock's dividend yield on January 30 came in at 4.39%.
As of the close of Q3 2023, 12 hedge funds in Insider Monkey's database reported having stakes in Fortis Inc. (NYSE:FTS), the same as in the preceding quarter. The overall value of these stakes is more than $61.8 million.
Manulife Financial Corporation (NYSE:MFC) is a Canadian multinational financial services company that operates in the insurance, wealth management, and financial services sectors. The company's dividend growth streak currently spans over 10 years and it offers a quarterly dividend of C$0.365 per share. With a dividend yield of 4.82%, MFC is one of the best Canadian dividend stocks on our list.
Insider Monkey's database of Q3 2023 indicated that 13 hedge funds owned stakes in Manulife Financial Corporation (NYSE:MFC), down from 18 in the previous quarter. The total value of these investments is over $106.4 million. Among these hedge funds, Galibier Capital Management was the company's leading stakeholder in Q3.
The Toronto-Dominion Bank (NYSE:TD), commonly known as TD Bank, is a major Canadian multinational bank that provides a wide range of financial products and services to individuals, businesses, and institutional clients. In November 2023, the company declared a 6.3% hike in its quarterly dividend to C$1.02 per share. Through this increase, the company stretched its dividend growth streak to nine years, which makes TD one of the best Canadian dividend stocks on our list. As of January 30, the stock has a dividend yield of 4.94%.
With a collective stake value of roughly $70 million, 14 hedge funds tracked by Insider Monkey owned positions in The Toronto-Dominion Bank (NYSE:TD). In comparison, 17 hedge funds held stakes in the company in the previous quarter, worth over $311 million.
A leading Canadian telecommunications company, TELUS Corporation (NYSE:TU) is next on our list of the best Canadian dividend stocks for income investors. The company provides a wide range of telecommunications and information technology services to consumers, businesses, and governments. It has raised its payouts every year since 2004 and currently offers a quarterly dividend of C$0.3761 per share. In addition to this, the company has returned nearly $19 billion to shareholders through dividends since 2004. As of January 30, the stock has a dividend yield of 6.11%.
At the end of September 2023, 14 hedge funds tracked by Insider Monkey owned stakes in TELUS Corporation (NYSE:TU), up from 13 in the previous quarter. The consolidated value of these stakes is over $54.4 million.
Thomson Reuters Corporation (NYSE:TRI) is a multinational information and media company that operates in the fields of news, information, data, and technology. The company offers a quarterly dividend of $0.49 per share, having raised it by 10% in 2023. This was the company's 30th consecutive year of dividend growth, which makes TRI one of the best Canadian dividend stocks on our list. The stock's dividend yield on January 30 came in at 1.30%.
As per Insider Monkey's database of Q3 2023, 16 hedge funds owned stakes in Thomson Reuters Corporation (NYSE:TRI), up from 15 in the previous quarter. The collective value of these stakes is more than $108 million. Among these hedge funds, Balyasny Asset Management was the company's leading stakeholder in Q3.
Royal Bank of Canada (NYSE:RY) ranks sixth on our list of the best Canadian dividend stocks for income investors. The global financial services company has been growing its dividends since 2012 and currently offers a quarterly dividend of C$1.38 per share. The stock's dividend yield on January 30 came in at 4.12%.
RY can be a good addition to dividend portfolios alongside some prominent US companies, such as The Procter & Gamble Company (NYSE:PG), Johnson & Johnson (NYSE:JNJ), and AbbVie Inc. (NYSE:ABBV).
At the end of Q3 2023, 19 hedge funds tracked by Insider Monkey reported having stakes in Royal Bank of Canada (NYSE:RY), down slightly from 20 in the previous quarter. The consolidated value of these stakes is over $193.6 million.
