Top Canadian Stocks to Buy for a Stable Passive Income

Here are three top Canadian dividend stocks for a stable passive income.

| More on:
money cash dividends

Image source: Getty Images

You don’t have to take a high risk to generate a stable passive income. In fact, many TSX stocks that pay stable dividends are relatively less volatile and, thus, are less risky. Here are three top Canadian dividend stocks for a stable passive income.

Fast increasing inflation and soon-to-come higher interest rates will likely weigh on growth stocks in the short term. Thus, markets could continue to trade haywire. So, it is prudent to switch to defensives if you are not okay with the increased broad market uncertainty.

Tourmaline Oil

Passive-income investors focus on high dividend yields. So, Tourmaline Oil (TSX:TOU) might not interest those at first with its relatively lower yield. However, Canada’s leading natural gas producer has been stuffing its excess cash to shareholders since last year.

Tourmaline recently increased its quarterly dividend to $0.20 per share from $0.18 a share previously. Apart from this regular, it will pay a special dividend of $1.25 per share on February 1.

So, overall, Tourmaline will pay a total dividend of $2.05 per share in 2022, implying an annualized forward yield of 4.4%.

A $16 billion Tourmaline saw superior free cash flow growth after sustained strength in natural gas prices. Since January 2021, the company has increased the regular dividend on three occasions and has issued special dividends twice. Importantly, if gas prices continue to remain strong, investors could see another special dividend in 2022.

Energy markets look well placed for this year, even after their steep rally in 2021. Higher oil and gas prices will likely accelerate their earnings growth and could unlock substantial value for shareholders.

Power Corporation of Canada

One of the most stable stocks on the TSX is Power Corporation of Canada (TSX:POW). It has been a classic safe-haven stock driven by its consistent profitability and stable dividends.

A $25 billion asset management and insurance company has seen a significant business expansion in North America, Europe and Asia. It has increased shareholder payouts by 8% CAGR since 2016.

The stock has returned 35% in the last 12 months, outperforming the TSX Composite Index. It also offers a juicy dividend yield of 4.6%, higher than average. So, Power Corporation’s slow-moving stock offers safety while dividends and stable earnings growth offer a decent total return potential.

BCE

Canada’s telecom giant BCE (TSX:BCE) is my third pick for passive-income investors. It has a long dividend payment history, backed by a juicy yield of 5.3%. Telecom companies like BCE generate stable earnings, which facilitate stable dividends.

Importantly, the 5G revolution will start a new growth chapter for telecom companies. BCE has been investing aggressively in its network and 5G infrastructure since last year. That might bear fruit in the next few years with a larger subscriber base and superior earnings growth.

BCE stock has returned 25% in the last 12 months and 165% in the last decade. BCE makes an attractive investment proposition for passive-income investors with decent dividends and less-volatile stock.

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.

The Motley Fool has no position in any of the stocks mentioned. Fool contributor Vineet Kulkarni has no position in any of the stocks mentioned.

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 »