It can be very easy to ignore dividend stocks in a TFSA. Of course, focusing on growth stocks could help investors see massive gains. However, dividend stocks can still play an important role. First and foremost, dividend stocks can help your portfolio withstand severe downturns. Look at the market today. Many of the most popular growth stocks have seen declines of more than 20%. In contrast, many dividend stocks have traded flat or even slightly positive so far this year.
In this article, I’ll discuss three dividend stocks that belong in your TFSA. All investors, regardless of approach could benefit from holding shares of these three companies!
This is one of the most popular industries among Canadians
If you took a poll of a random sample of Canadian investors, there stands a good chance that the majority will hold shares of at least one of the Big Five banks. This is because the five large Canadian banking companies hold such a dominant position atop the Canadian banking industry. Of that group, Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) is my top pick.
Bank of Nova Scotia stands out among its peers, because of its international focus. Unlike the other large Canadian banks, Bank of Nova Scotia hasn’t solely focused its business on the North American banking industry. In fact, with more than 2,000 branches and offices across 50 countries, it’s known as Canada’s most international bank. This international focus also provides Bank of Nova Scotia with massive geographic diversification. Dividend investors should take note of the company’s 4.37% forward dividend yield.
A very important Canadian company
When it comes to the Canadian economy, railway companies play a very important role. As it stands, we have no way to transport large amounts of goods across long distances if not by relying on the railway. In addition, Canada’s railway industry is heavily dominated by two companies. Because of this interesting dynamic, Canadian National Railway (TSX:CNR)(NYSE:CNI) should continue to see a lot of demand in the coming years.
Canadian National is known as a Canadian Dividend Aristocrat. By definition, this is a company that has grown its dividend distribution in each of the past five years. However, Canadian National greatly surpasses that minimum requirement. In fact, it has managed to grow its dividend for the past 25 years. The company maintains a payout ratio of about 35%. This suggests that it could continue to raise its dividend in the future with ease.
This is one of the most reliable dividend companies in Canada
When discussing Canadian dividend stocks, it’s very hard to not include Fortis (TSX:FTS)(NYSE:FTS). When it comes to keeping its shareholders happy, very few companies can outdo Fortis. It holds the second-longest active dividend-growth streak in Canada. Fortis has increased its dividend in each of the past 47 years.
The main reason Fortis is able to continually increase its distribution is perhaps because of the nature of its business. Fortis provides regulated gas and electric utilities to 3.4 million customers in Canada, the United States, and the Caribbean. Dividend investors will also be happy to hear that its forward yield is very attractive at 3.54%.