Was creating a passive-income stream one of your financial resolutions this year? If so, dividend stocks can help you do exactly that. Here are two top dividend-paying companies that should be on every passive investorâs watch list in 2022.
Dividend stock #1: Algonquin Power
There are several very good reasons as to why this utility stock should be on Canadian investorâs radars. In addition to passive income, Algonquin Power (TSX: AQN)(NYSE: AQN) can provide a portfolio with dependability as well as market-beating growth.
At todayâs stock price, Algonquin Powerâs $0.85 annual dividend is good enough for a yield just shy of 5%. There arenât too many dividend stocks on the TSX yielding as high as Algonquin Power right now. So, if generating a healthy stream of passive income is your main objective, this dividend stock is for you.
But itâs the dependability and growth that makes Algonquin Power a rare find among Canadian stocks. Utility stocks tend to be low-volatile investments due to the dependable nature of the business. And in todayâs market condition, where volatility is spiking, owning shares of a dependable utility stock is not a bad idea.
Lastly, for a slow-growing utility stock, Algonquin Power is no stranger to outperforming the marketâs returns. Shares of the dividend stock are up more than 50% over the past five years. And thatâs not even including dividends, either. In comparison, the S&P/TSX Composite Index is up less than 40% since early 2017.
If youâre looking for a well-rounded dividend stock you can feel good about holding for the long term, Algonquin Power is a solid choice.
Dividend stock #2: Toronto-Dominion Bank
The Big Five Canadian banks have some of the top dividends on the TSX. Whether youâre looking for a high yield of a reliable payout, at least one Canadian bank will have you covered.
At a market cap nearing $200 billion, Toronto-Dominion Bank (TSX: TD)(NYSE: TD) is the second-largest company on the TSX, behind only RBC. But once you factor in TD Bankâs future growth plans, it wouldnât be surprising to see the bank overtake RBC in the coming years.
What separates TD Bank from other dividend stocks for me is the bankâs growing international presence. Close to one-third of the bankâs net income is already being driven from its U.S. operations. And thatâs with plenty of expansion still left to be done in the western half of the country.
TD Bankâs annual dividend of $3.56 per share yields just about 3.5% at todayâs stock price. Investors can find higher yields than that on the TSX — there’s no argument there. But when you factor in the growth potential and the diversification from the bankâs U.S. exposure, this is top dividend stock for passive-income investors.
Foolish bottom line
Canadian passive-income investors have a wide choice when it comes to dividend stocks. It all comes down to exactly what youâre looking for.Â
If yield is all youâre concerned about, you can definitely find a dividend stock yielding upwards of 5%. But if youâre willing to dig a bit deeper, there are many Canadian dividend-paying companies that can offer much more than just a high yield.
