2 Attractive Canadian Stocks Whose Dividends Could Double

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) is one of the two dividend stocks that are well positioned to double your returns.

| More on:
A stock price graph showing growth over time

Image source: Getty Images.

Canada’s top banks and energy infrastructure companies have been a great source of income for retirees and savers. Their strong balance sheets, diversified revenue models, and their ability to produce superior cash flows make them attractive stocks for long-term investors.

Let’s have a look Toronto-Dominion Bank (TSX:TD)(NYSE:TD) and TransCanada Corporation (TSX:TRP)(NYSE:TRP) to see which of these dividend stocks has the potential to grow the payout quickly.

TD Bank

To earn a steady income stream, TD Bank is a great dividend-growth stock to consider. TD is among the top five Canadian lenders that dominate the domestic banking market and have provided consistent returns to its investors.

After an 11% increase in its payout this year, income investors in TD stock now earn a $0.67-a-share quarterly dividend, which translates into a 3.5% yield on yearly basis.

The bank is likely to grow its dividend payout between 7% and 10% each year going forward, as it benefits from diversified business operations thanks to its aggressive growth in the U.S. The bank now runs more branches in the U.S. than in Canada, making it one of the top 10 lenders in the U.S.

In the second-quarter earnings report, TD showed how consistent it has been in exceeding expectations. The bank’s earnings per share, excluding one-off items, rose to $1.62 in the quarter to March 31 compared with $1.34 a year ago. Analysts had, on average, forecast earnings per share of $1.50.

In the quarter that banks struggled to sell their mortgage products after the new stringent requirements kicked in for borrowers, TD was still able to show a strong performance in its Canadian business, helped by a 17% jump in net income from its retail operations.

Trading at $76.35 at the time of writing, TD stock looks fairly valued after a strong post-earnings rally this month. Still, TD could prove a solid addition to your portfolio, as it has a lot of room to continue with its policy of returning more cash to investors.


Among the energy infrastructure providers in Canada, Calgary-based TransCanada is one of my favourite stocks. The company’s long history of paying dividends and its diversified energy assets make it an attractive addition to any income portfolio. TransCanada has raised its dividend for 17 consecutive years.

The company runs a network of pipelines that ship natural gas and liquids. It also produces power and manages gas-storage facilities. Last year, TransCanada overcame a major hurdle in the construction of a major pipeline project, Keystone XL, after the Trump administration approved the project.

This project is part of the company’s $48 billion in medium- to long-term projects. In the short to medium term, TransCanada has about $23 billion worth of projects that it aims to complete by the end of the decade. These projects are likely to fuel 8-10% dividend-growth in TransCanada’s $2.76-a-share annual dividend until 2020, according to the company’s projections.

After almost 12% pullback in its share value this year, TransCanada stock now yields more than 5%, making it an attractive pick for long-term investors.

The bottom line

Buying dividend-growth stocks, such TD and TransCanada is a slow but steady way of doubling your income. TD, for example, has provided more than 131% in total returns during the past decade. If you’re in it for the long haul, investing in these stocks is a good approach to potentially double your income.

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 Haris Anwar has no position in any stocks mentioned.

More on Dividend Stocks

TFSA and coins
Dividend Stocks

Maximize Your Retirement Income: How to Turbocharge Your TFSA Returns

TFSA investors could pick different strategies to boost returns.

Read more »

Golden crown on a red velvet background
Dividend Stocks

Canadian Utilities Is a “Dividend King,” But I Like This Stock Even More

Canadian Utilities (TSX:CU) stock is a solid dividend provider, but there's more to look at then just how much you're…

Read more »

Path to retirement
Dividend Stocks

Retire Rich: TFSA Stocks to Power Your Golden Years

Investing in your TFSA early has huge benefits. Here’s a look at some stocks for your TFSA that can power…

Read more »

money cash dividends
Dividend Stocks

These TSX Telecom Stocks Are Dialling Up Impressive Profits 

Two telecom stocks are dialing up dividend profits for shareholders while inflation and interest are slowing dividends for some companies.

Read more »

Group of industrial workers in a refinery - oil processing equipment and machinery
Dividend Stocks

2 Top Canadian Energy Stocks to Buy Right Now

Blue-chip TSX stocks like these two Canadian energy sector giants can help you generate substantial long-term wealth growth.

Read more »

edit Safety First illustration
Dividend Stocks

Safeguarding Your Wealth: 5 Safe Stocks to Buy in a Rising Interest Rate Market

Established companies like the Canadian National Railway tend to be relatively safe in tough economic conditions.

Read more »

Various Canadian dollars in gray pants pocket
Dividend Stocks

1 Passive-Income Stream and 1 Dividend Stock for $288 in Monthly Income

It can be hard to invest when you don't have any cash, so create some from this passive-income method and…

Read more »

Dividend Stocks

2023 TFSA Contribution Time: 2 Dividend Stocks to Buy With $6,500

Buy these two great dividend stocks in your TFSA as a part of a diversified portfolio if you haven't already.

Read more »