5 Top TSX Dividend Stocks With Upside Potential in 2021

Stocks such as Enbrigde (TSX:ENB)(NYSE:ENB) and four other key names could bring both defensiveness and growth in the new year.

All-weather stocks can be fairly hard to spot. Some offer moderate upside and some offer protection on the downside. These kinds of characteristics are rare to find under one roof. But today, we will take a quick look at five such stocks that trade on the TSX. From wide economic moats to recovery potential, these names pack passive income, share price growth, and defensive qualities.

Mixing growth with defensive properties

Green power investing has been given a boost by the imminent change of faces at the White House. The increasingly divisive U.S. political scene is serving up a broadly conservative outlook shot through with some progressive upside. Dividend yields could be richer, but it’s still relatively early days yet for green power. For instance, investors can choose between AQN’s 4% yield and Northland Power’s yield of 2.7%.

Speaking of renewables, does anybody have Enbridge on their 2021 growth stock bingo card? Because Enbridge could potentially see as much as 50% annual earnings growth over the next one to three years. And yes, Enbridge does also satisfy a green power investing strategy to a degree. By packing a wide economic moat with diversifying green power credentials, Enbridge can appeal to a vast swathe of investor types.

Other household names could also see big upside in 2021 as well. Manulife Financial could come back stronger in the second half of next year. This kind of time frame fits with a generally expected beginning of an economic recovery. The pandemic has been hard on financials in general. But insurance has had an especially rough ride in 2020. The recovery thesis therefore sees names such as Manulife emerging with some growth ahead.

Mixing the comeback potential of Manulife with Enbridge’s defensive market domination, investors have a strong one-two punch in terms of dividend strength. The insurer’s yield of 4.8% is backed up with below-book value and thus the promise of capital appreciation. Team this with Enbridge’s rich yield of 7.8% and shareholders have a winning combination well placed for a recovery market. This play matches passive income with capital gains plus recovery upside.

The steady-rolling rail stock

Year on year, CN Rail shares have appreciated by an impressive 16.8%. That’s not bad, considering that this stock is so closely tied to the Canadian economy itself. In fact, any growth in this tightly controlled space is testament to a canny management style. CN Rail has quickly acclimated to the changing needs of mid-pandemic Canada. This stock also ticks the box for investors eyeing a more positive North American trade environment than the last four years have brought.

In summary, though, any coming bull market won’t just be driven by progressive trends. It’s also going to be driven by a touch of relief — relief that those proposed big corporate tax cuts likely won’t get past the Senate. So, on the one hand, the green power and pot stock momentum has been given a boost. While on the other, corporate considerations are still being met. In short, once the pandemic eases, a truly unique bull market could emerge.

Fool contributor Victoria Hetherington has no position in any of the stocks mentioned. David Gardner owns shares of Canadian National Railway. The Motley Fool owns shares of and recommends Canadian National Railway and Enbridge. The Motley Fool recommends Canadian National Railway.

More on Dividend Stocks

diversification and asset allocation are crucial investing concepts
Dividend Stocks

1 Dividend Stock Set to Excel Long Term, Even While Down 43%

Northland’s selloff has lifted the income appeal, but the long-term payoff depends on project execution improving.

Read more »

Happy golf player walks the course
Dividend Stocks

Top Canadian Stocks to Buy for Passive Income

These three Canadian stocks are ideal to boost your passive income.

Read more »

senior couple looks at investing statements
Dividend Stocks

Retirees: 2 Discounted Dividend Stocks to Buy in January

These high-yield stocks are out of favour, but might be oversold.

Read more »

resting in a hammock with eyes closed
Dividend Stocks

Passive Income: How Much Do You Need to Invest to Make $1,000 per Month

Typically, you can earn more passive income with less capital invested by taking greater risk, which could involve buying individual…

Read more »

diversification and asset allocation are crucial investing concepts
Dividend Stocks

1 Reason I Will Never Sell Brookfield Infrastucture Stock

Here's why Brookfield Infrastructure is one of the very best Canadian stocks to buy now and hold for decades to…

Read more »

dividends grow over time
Dividend Stocks

Top Canadian Stocks to Buy With $15,000 in 2026

New investors with $15,000 to invest have plenty of options. Here are three top Canadian stocks to buy today.

Read more »

coins jump into piggy bank
Dividend Stocks

The Best Canadian Stocks to Buy and Hold Forever in a TFSA

Use your TFSA contribution room by buying two of the best Canadian stocks, BCE and Fortis for their generous yields…

Read more »

a woman sleeps with her eyes covered with a mask
Dividend Stocks

3 Canadian Stocks That Are the Best to Buy and Hold in a TFSA

Three “sleep well” TFSA stocks can come from boring, essential businesses: rail, insurance, and waste.

Read more »