2 Rising Canadian Dividend Stocks With Above-Average Yields

Here’s why Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) and BCE Inc. (TSX:BCE)(NYSE:BCE) deserve a closer look.

| More on:

Dividend investors are always searching for top-quality companies to add to their income or retirement portfolios.

Let’s take a look at two Canadian heavyweights that are enjoying nice rallies, yet still offer attractive yields.

Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM)

CIBC is up nearly 10% in the past three months, and more gains could be on the way.

Why?

The stock took a hit earlier this year, as investors started to get worried about a potential meltdown in the Canadian housing market.

CIBC has the largest exposure to the sector, on a relative basis, compared to its heavyweight peers, and the company has a history of taking substantial hits when big bets go bad.

As a result of the sell-off, the trailing price-to-earnings (P/E) multiple dropped below 10 in recent months, presenting a great opportunity for bargain hunters to pick up the stock.

Even after the latest rebound, CIBC still trades at about 10.5 times trailing 12-month earnings, which is a significant discount to the other big Canadian banks.

House prices continue to rise on a year-over-year basis, even after two rate hikes, and fears about a total meltdown are starting to fade, so CIBC could see more investors get bullish on the stock in the coming months.

The company recently raised the dividend and additional hikes could be on the way as this year’s acquisitions in the United States contribute to earnings.

At the time of writing, the dividend provides a yield of 4.5%.

BCE Inc. (TSX:BCE)(NYSE:BCE)

BCE rarely drops to the point of being oversold, but the stock pulled back from $62 per share in April to just below $58 in September. At that point, dividend fans started to jump back in, and the stock is now taking a new run at the 2017 high.

BCE isn’t going to shoot the lights out on the growth side, but the company continues to expand its dominant position in the Canadian market.

The acquisition of Manitoba Telecom Services earlier this year pushed BCE into top spot in the Manitoba market and sets the company up for an expansion of its presence in the western part of the country.

BCE generates significant free cash flow and has the power to raise prices when it feels it needs a bit of extra cash, so investors shouldn’t have to worry about the safety of the dividend.

As data use grows, subscribers are paying more per month on their mobile accounts. In addition, BCE’s Fibre-To-The-Home (FTTH) rollout gives it an important competitive advantage in the market for internet and Fibe TV services.

Investors are starting to shrug off the fears that higher interest rates will hit the telecoms, and BCE’s recent rally could continue to a new all-time high in the next few months.

The stock currently provides a yield of 4.6%.

Is one more attractive?

CIBC definitely comes with more risk, but the bank still looks oversold, so investors with a contrarian style might want to make the baby of the Big Five the first choice.

Otherwise, BCE is a proven buy-and-forget pick for dividend investors who don’t want to monitor their holdings every day.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Andrew Walker owns shares of BCE.

More on Dividend Stocks

Two seniors float in a pool.
Dividend Stocks

TFSA: How to Earn $1,890 in Annual Tax-Free Income

Plunk these investments into your TFSA to earn passive income and avoid the taxman.

Read more »

Engineers walk through a facility.
Dividend Stocks

1 TSX Stock I Wouldn’t Touch With a 10-Foot Pole

AtkinsRéalis (TSX:ATRL) is one TSX stock I'd never invest in.

Read more »

edit Woman in skates works on laptop
Dividend Stocks

3 No-Brainer Stocks to Buy Under $30

These three stocks all offer a huge deal for investors looking for dividends, as well as growth that will last.

Read more »

You Should Know This
Dividend Stocks

How to Convert a $300 Monthly Investment Into $338 in Monthly Income

If you want a certain amount in monthly passive income, invest a similar amount today and leave the rest to…

Read more »

Increasing yield
Dividend Stocks

3 Income Stocks With Big Yields to Consider in April 2024

If you haven’t yet made your March investments, here are three income stocks to buy the dip and lock in…

Read more »

Senior Man Sitting On Sofa At Home With Pet Labrador Dog
Dividend Stocks

RRSP Investors: Don’t Miss Out on This Contribution Hack!

This hack has so many benefits for you -- not just when you put it in your RRSP but for…

Read more »

A red umbrella stands higher than a crowd of black umbrellas.
Dividend Stocks

Passive Income: 2 Safe Dividend Stocks to Own for the Next 10 Years

Dividend stocks such as Manulife and Fortis can help you generate a stable and recurring passive-income stream.

Read more »

Young woman sat at laptop by a window
Dividend Stocks

3 Dividend Stocks Everyone Should Own for the Long Haul

For investors looking for top-tier dividend stocks to buy and hold for the long term, here are three of my…

Read more »