The TSX Index has had a strong start to the year. It may have you wondering what top Canadian dividend stocks are still a good bargain in 2021? Well, there may be more than you think. However, you have to do a bit of digging to find them. In March or April of 2020, you could have bought pretty much any stock and it would likely be up today.
However, with stock markets nearing or reaching all-time highs, Canadian investors need to be shrewd. It is a stock pickers market. I still think a lot of income-producing stocks present great value. Bonds provide safety, but almost no yield. So passive income investors are flocking to equities for yield. I suspect this could drive the valuations of top Canadian dividend stocks higher throughout the year.
A top Canadian utility stock
One top dividend stock Canadians should look at is Enbridge (TSX:ENB)(NYSE:ENB). If you don’t mind a little risk, you can lock in a massive 7.72% dividend with this stock today. This pick isn’t for everybody. Lately, pipelines have become a taboo word. After Keystone XL was crushed by the U.S. Biden Administration, the stock has come under pressure.
Yet Enbridge is a great company. It has pipelines and distribution networks that are critical for our society to function. Its assets are largely contracted or regulated, and it has a very stable stream of cash flows. The chances of new pipelines being built is almost null, so Enbridge should continue to dominate its competitive position.
Also, it is adapting its position to look at opportunities in renewables, hydrogen, and cogeneration. If you want to lock in a great yield, with some upside from a recovery in oil, this is a great stock to own.
A top TSX real estate stock
Granite REIT (TSX:GRT-UN)(NYSE:GRP-UN) is a top Canadian stock to own if you love collecting e-commerce packages from your doorstep. For every item that is sent, you need a warehouse or fulfillment centre to sort and package it. Granite owns and manages institutional quality logistics, e-commerce, and industrial properties across North America and Europe. While its largest tenant is Magna International, the remainder of its revenues come from the likes of Amazon, Restoration Hardware and Wayfair.
This REIT has a great management team who consistently find ways to accrete rental and cash flow growth. It is locking in incredibly low (sub 1%) interest rates on its leverage, so cash flow yield spreads should be very attractive over the next few years. While it pays a nice 4% dividend today, this stock has some great upside from the overall growth in e-commerce.
A great Canadian technology stock
Sylogist (TSXV:SYZ) is a stock that is perhaps a little less known. It provides enterprise resource planning (ERP) and software-as-a-service solutions for public and non-profit organizations. This stock is not as exciting as some of the hot 2020 tech Initial Public Offerings (IPOs). However, for an income investor, it gets the job done. It pays a great 4.4% dividend, which is supported by very stable recurring subscription revenues.
Yet this company could be in the midst of a new revival in growth. It just got a new CEO who has ramped up his team and resources. This great Canadian dividend stock has $43 million in cash and around $85 million in total liquidity.
I suspect it is going to aggressively attempt to expand organically and through acquisition. Its markets are generally lower growth, but there are broad opportunities for consolidation today. If it can execute its strategy, not only will you get a nice dividend, but some exciting valuation expansion as well!
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.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Fool contributor Robin Brown owns shares of Amazon, ENBRIDGE INC, and GRANITE REAL ESTATE INVESTMENT TRUST. David Gardner owns shares of Amazon. The Motley Fool owns shares of and recommends Amazon, Enbridge, and Wayfair. The Motley Fool recommends GRANITE REAL ESTATE INVESTMENT TRUST, Magna Int’l, and RH and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon.