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3 Top TSX Dividend Stocks to Buy Before September

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In this market, the search for yield has not really materialized of late. Most investors are focused on growth and growth alone. However, the consequence of this current market sentiment is that various dividend stocks are now trading at very attractive valuations.

In this article, I’m going to highlight three of the top Canadian dividend stocks I think holds tremendous value right now. Each of these companies provides relatively high levels of safety and defensiveness in addition to their yield.

Let’s dive in.

Top dividend stock: Algonquin Power

One of the best long-term buy and hold picks in the Canadian utilities space has to be Algonquin Power & Utilities (TSX:AQN)(NYSE:AQN). Indeed, this extremely stable cash flow machine has continued to provide growing dividends over time.

For Canadian investors, Algonquin’s 4.3% dividend yield has become even more valuable of late, since it’s denominated in U.S. dollars. Thus, Canadian investors have been able to diversify their currency risk while also retaining a Canadian dividend tax credit in taxable accounts. That’s a very meaningful differentiator for those looking to achieve long-term income goals.

Algonquin Power’s growing renewables business is also intriguing to long-term investors. Accordingly, this is one of the best income plays for those seeking total returns today, in my view.

Top dividend stock: Enbridge

One of the highest-yield large-cap dividend stocks on the TSX right now is Enbridge (TSX:ENB)(NYSE:ENB). This pipeline company’s 6.9% dividend yield is by and large the juiciest yield among the large-cap stocks I follow closely.

I think Enbridge’s long-term cash flow stability and defensive business model make this dividend yield extra attractive. Long-term investors seeking a defensive high-yield option can’t go wrong with Enbridge. Additionally, the fact that the company’s Line 3 extension project is coming online this year adds to the allure of this stock. This project’s completion will bring with it increased cash flows to further stabilize this yield.

Over time, I expect Enbridge’s yield to come down, as investors search for stable income plays. For now, this remains one of the best picks on the TSX for income investors looking for yield today.

Top dividend stock: Killam Apartment REIT

Among Canadian REITs, Killam Apartment REIT (TSX:KMP.UN) continues to be a top pick of mine. This residential REIT focused on the Atlantic Canadian market continues to be a suitable long-term holding for investors seeking portfolio diversification.

I like the residential exposure Killam provides. This company’s portfolio of high-quality assets in up-and-coming markets makes for a unique value proposition. Relative to other REITs, I view Killam’s fundamentals as superior. Accordingly, this is both a safe, defensive REIT with growth attributes supplementing the trust’s 3.2% dividend yield.

Those looking for Canadian real estate exposure may want to consider this intriguing option. Unlike many REITs focused on the Toronto and Vancouver markets, which may be in bubble territory, Killam’s exposure is to more stable and steady markets. Indeed, this overlooked defensive REIT could be one of the best in North America right now.

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 Chris MacDonald has no position in any stocks mentioned in this article. The Motley Fool owns shares of and recommends Enbridge and Killam Apartment REIT.

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