The 10 Best Canadian Dividend Stocks

Last Updated on January 11, 2023

Let’s go straight to it. Here are some potential good Canadian dividend stocks:

The best Canadian dividend stocks

1. Enbridge Inc. (ENB): Enbridge Inc. is one of the largest energy infrastructure companies in North America and operates one of the largest and most diversified natural gas and crude oil pipelines in the world. Its dividend yield is 8.19%, making it an attractive investment for income-seeking investors.

2. BCE Inc. (BCE): BCE Inc. is one of the largest telecommunications companies in Canada and is a major provider of wireless, internet, and other communications services. Its dividend yield is 5.41%, making it a solid choice for those seeking income from their investments.

3. Canadian Imperial Bank of Commerce (CM): Canadian Imperial Bank of Commerce is one of the top banking and financial services companies in Canada. Its dividend yield is 4.92%, making it a great option for income-seeking investors.

4. Bank of Nova Scotia (BNS): Bank of Nova Scotia is one of the largest banks in Canada and provides a wide range of banking services. Its dividend yield is 5.51%, making it a great income-producing investment.

5. Telus Corporation (T): Telus Corporation is a major telecommunications company in Canada and provides wireless, internet, and other services. Its dividend yield is 4.83%, making it a great choice for those seeking income from their investments.

6. Toronto-Dominion Bank (TD): Toronto-Dominion Bank is one of the largest banks in Canada and provides a range of banking services. Its dividend yield is 4.12%, making it a great choice for income-seeking investors.

7. Suncor Energy Inc. (SU): Suncor Energy Inc. is one of the largest integrated energy companies in Canada and is a major producer of oil and natural gas. Its dividend yield is 4.03%, making it a great choice for investors looking for income from their investments.

8. Brookfield Asset Management Inc. (BAM.A): Brookfield Asset Management Inc. is a major real estate and infrastructure asset manager in Canada and globally. Its dividend yield is 4.64%, making it an attractive investment for those seeking income from their investments. (We are long BAM.)

9. Manulife Financial Corporation (MFC): Manulife Financial Corporation is a major life insurance and financial services company in Canada. Its dividend yield is 4.05%, making it a great choice for income-seeking investors.

10. Power Corporation of Canada (POW): Power Corporation of Canada is a major asset management and financial services company in Canada. Its dividend yield is 4.25%, making it a great choice for those seeking income from their investments.

How to buy Canadian stocks?

Buying Canadian stocks is a great way to diversify your portfolio and capitalize on the many growth opportunities available in Canada’s strong economy. To buy Canadian stocks, you will need to open an account with a broker that offers stocks traded on the Toronto Stock Exchange (TSX) or other Canadian exchanges. We recommend Interactive Brokers (we use them ourselves).

The first step is to choose a brokerage account. There are a wide variety of brokers who provide different services and fees, so it’s important to shop around and find the one that best meets your needs. You will also want to consider if you would like to open a retirement account, such as an RRSP or TFSA, to help you save for your future.

Once you have chosen a broker and opened an account, you can then proceed to trade Canadian stocks. The best way to get started is to research different companies and stocks that you are interested in. This can be done through the broker’s website, or you can use an online stock screener to quickly find stocks that match your criteria.

Once you have identified a few stocks that meet your criteria, you can then proceed to buy them. You will need to decide how much money you want to invest in each stock and place an order with your broker. You can choose to buy a single stock, or you can buy a basket of stocks to diversify your portfolio.

It is important to remember to consider all the risks associated with investing in stocks, including the potential for losses. You should also keep a close eye on the market and any news that could affect the stock you are investing in. Finally, if you are ever uncertain about a stock or unsure of how to proceed, it is a good idea to consult a financial advisor or stockbroker before making any decisions.

Buying Canadian stocks can be a great way to diversify your portfolio and capitalize on the growth opportunities available in Canada. With the right broker and research, you can begin to build a successful portfolio of Canadian stocks.

Are Canadian dividend stocks cheap?

The answer to this question depends on a number of factors and is not a simple yes or no.

In general, Canadian dividend stocks may appear to be undervalued relative to other dividend-paying stocks in other jurisdictions. This is because the Canadian market has not seen the same growth as other markets, such as the U.S. or other developed countries.

When comparing the value of Canadian dividend stocks to other markets, it is important to look at a variety of metrics. These include the dividend yield, the price-to-earnings ratio (P/E), and the price-to-book ratio (P/B).

The dividend yield is the annual dividend paid by the company divided by the current market price of the stock. A higher dividend yield suggests a lower stock price relative to the dividend paid, which can indicate a better value. The P/E ratio is a measure of how much investors are willing to pay for each dollar of the company’s earnings. A lower P/E ratio suggests that the stock is undervalued. The P/B ratio measures the value of the company relative to the book value of the company’s assets. A lower P/B ratio indicates the stock is undervalued relative to the value of the company’s assets.

When comparing Canadian dividend stocks to those in other markets, it is important to keep in mind that there are a number of factors that can affect the price and yield of a stock. These include macroeconomic factors, such as interest rates and economic growth, as well as company-specific factors, such as profitability and future prospects.

Overall, Canadian dividend stocks may appear to be undervalued relative to other dividend-paying stocks in other markets. However, it is important to consider a variety of factors before making an investment decision.

Pros and cons of buying Canadian dividend stocks

Pros:

1. Tax Benefits: Canada has one of the most generous tax regimes for dividend income in the world; the dividend tax credit offered by the Canadian government is a significant benefit for investors. This dividend tax credit allows investors to receive a tax break on dividends earned from Canadian companies. The lower tax rate encourages investors to buy Canadian dividend stocks, as they can benefit from lower taxes and receive more of their dividends as take-home money. A tax-treaty lowers the withholding rate to 15% for almost all developed markets. However, only a tax-advisor can help you with the specifics.

2. Stability: Canadian markets are generally stable and dependable, offering investors a safe and secure environment to invest in. This is an attractive benefit, as it allows investors to have peace of mind when investing, knowing that their investments are unlikely to experience any major dips or sudden changes.

3. Diversification: Investing in Canadian dividend stocks can help investors diversify their portfolios, reducing their overall risk and increasing their chances of achieving long-term success. Diversification is a key component of successful investing, and investing in a variety of dividend stocks from different countries can help investors protect themselves from market downturns and economic instability.

4. Long-Term Growth: Canadian dividend stocks tend to offer investors long-term growth potential, as they often pay out dividends quarterly or annually. This provides investors with a steady stream of income, while also giving them the potential to benefit from dividend growth over time.

Cons:

1. Currency Risk: Since Canadian stocks are denominated in Canadian dollars, investors must consider the risk that their investments may lose value due to fluctuations in exchange rates. This is especially true for investors who do not plan to hold their investments for a long period of time; if the Canadian dollar depreciates relative to the US dollar, for instance, investors who must convert their profits back into US dollars may suffer a loss.

2. Low Returns: Canadian dividend stocks tend to offer relatively low returns compared to other investments, such as stocks from the US and other developed countries. This is due in part to the fact that Canadian markets are relatively small, and the investor pool is not as large as it is in other countries.

3. Lack of Liquidity: Canadian dividend stocks tend to be less liquid than stocks traded on larger exchanges, such as the NYSE or Nasdaq. This can make it difficult for investors to quickly turn their investments into cash, as they may have difficulty finding buyers for their stocks.

Are Canadian stocks shareholder friendly?

Canadian stocks are generally regarded as being very shareholder-friendly. Many large Canadian companies have strong corporate governance policies in place that make sure shareholders are treated fairly and that their voices are heard. They also often offer generous dividend payments that can provide a reliable source of income for investors.

One way in which Canadian stocks are particularly shareholder-friendly is through the voting rights that come with owning shares. Shareholders are typically able to vote on matters such as the election of board members or major corporate decisions. This gives shareholders a say in how their company is run and the direction it takes, which is beneficial for both the company and shareholders.

Another way in which Canadian stocks are often shareholder-friendly is through the implementation of strong corporate governance policies. These policies ensure that directors and management are held accountable for their decisions and that shareholders are treated equitably. These policies also limit the amount of risk that shareholders are exposed to and help ensure that their investments are protected.

In addition, many Canadian companies offer generous dividend payments to their shareholders. These payments can often provide a steady source of income, which is appealing to many investors. Canadian stocks are also typically less volatile than stocks from other countries, which can help provide a more stable investment return over time.

Overall, Canadian stocks are generally considered to be very shareholder-friendly. They offer shareholders the ability to vote on corporate decisions, strong corporate governance policies, and generous dividend payments. These features make Canadian stocks an attractive option for investors who are looking for a reliable and secure long-term investment.

How big is the Canadian stock market?

The Canadian stock market, also known as the Toronto Stock Exchange (TSX), is one of the leading stock exchanges in the world. As of December 2020, the total market capitalization of the TSX stood at $2.51 trillion CAD, making it the tenth largest stock exchange in the world.

The TSX is home to over 1,500 companies, including some of the largest and most well-known companies in Canada such as the Royal Bank of Canada, Canadian National Railway Company, and the Bank of Nova Scotia. The TSX is also home to a wide variety of sectors, including energy, mining, banking and finance, technology, and consumer staples.

The TSX is an important financial market in Canada, as it is the primary location for Canadian companies to list their shares and raise capital. The exchange is also a key driver of the Canadian economy, as it facilitates the flow of capital between investors, businesses, and the Canadian economy as a whole.

In addition to the TSX, there are other stock exchanges in Canada, such as the Montreal Exchange and the TSX Venture Exchange. The combined market capitalization of these exchanges stands at $3.43 trillion CAD. This makes the Canadian stock market one of the largest in the world.

What is the average dividend yield historically in Canada?

The average dividend yield in Canada has historically been around 4-4.5%. Dividend yield is calculated by dividing a company’s annual dividend payments by its current stock price. For example, if a company pays out $1.00 per share in dividends and the stock is currently trading at $20.00 per share, the dividend yield would be 5% ($1.00/$20.00).

Dividend yields can vary significantly from company to company and over time, depending on factors such as the company’s profitability, payout ratio, and the overall health of the stock market. In Canada, many of the largest companies pay out relatively low dividend yields due to their large market capitalizations and the relative stability of their businesses. Companies with larger market capitalizations are typically more mature and have more limited growth prospects, which means their stock prices tend to remain relatively stable. This makes it difficult for them to increase their dividend yields even if their profits increase.

On the other hand, smaller companies tend to have higher dividend yields, as they are often more volatile and have a greater potential for earnings growth. As a result, their share prices tend to be more volatile, and their dividend yields may rise or fall more quickly depending on the overall health of the economy.

Overall, the average dividend yield in Canada has historically been between 4 and 4.5%. This is in line with the historical dividend yields of other developed countries, such as the United States and the United Kingdom.

Is dividend investing more popular in Canada compared to other countries?

Dividend investing has long been popular in Canada, and the popularity has only grown in recent years. There are a few factors that make dividend investing more popular in Canada than in other countries.

First, Canada has a relatively mature and stable economy, which makes it an attractive place to invest. This is especially true when it comes to dividend investing, as investors can rely on steady income from dividends. Furthermore, the Canadian tax system favors investors who hold dividend-paying stocks, as dividend payments are taxed at a lower rate than other sources of income. This makes dividend investing a more attractive option for Canadians than for citizens of other countries.

Second, the Canadian stock market is home to a large number of dividend-paying stocks. The TSX, Canada’s main stock exchange, has a number of dividend-paying stocks from a variety of industries. This makes it easy for investors to diversify their portfolios and invest in a variety of companies that pay dividends.

Finally, Canadians have a strong culture of investing. Many Canadians have been investing for generations, and it is a part of their financial culture. This makes dividend investing a more attractive option than it might be in other countries.

In conclusion, dividend investing is more popular in Canada than in other countries due to a number of factors. Canada’s stable economy, tax system, and culture of investing all contribute to the popularity of dividend investing in the country.

The historical return of Canadian stocks vs Canadian dividend stocks

The historical return of Canadian stocks and Canadian dividend stocks is important to consider when making investment decisions since different stocks will provide different returns over time. Canadian stocks are stocks that are publicly traded on Canadian stock exchanges, such as the Toronto Stock Exchange (TSX). Canadian dividend stocks are stocks that pay out a portion of their profits to shareholders in the form of dividends.

Historically, the returns of Canadian stocks have been quite strong. Over the past 10 years, the S&P/TSX Composite Index, which tracks the performance of the top 250 stocks on the TSX, has risen an average of 8.7% per year. This return is higher than the 7.3% return of the S&P 500 in the United States over the same period.

Canadian dividend stocks have also seen strong returns over the past 10 years. The S&P/TSX Capped Dividend Index, which tracks the performance of the top 25 dividend-paying stocks on the TSX, has risen an average of 9.5% per year. This return is higher than the 8.7% return of the S&P/TSX Composite Index and the 7.3% return of the S&P 500.

In general, Canadian stocks have generated higher returns than those of their U.S. counterparts. This is likely due to the fact that the Canadian economy has been more resilient than the U.S. economy in recent years. Furthermore, Canadian dividend stocks have generated even higher returns than those of the Canadian stock market, likely due to the fact that Canadian dividend stocks offer investors a steady stream of income that can be used to offset market volatility.

Overall, investors should take into account both the historical returns of Canadian stocks and Canadian dividend stocks when making investment decisions. Canadian stocks have seen strong returns over the past 10 years and Canadian dividend stocks have seen even stronger returns. Therefore, investors should consider investing in both stocks and dividend stocks in order to maximize their returns and minimize their risks.

 

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