With the stock market continuing to show weakness, investors should consider adding dividend stocks to their portfolios. Historically, these stocks have outperformed growth stocks during periods of market uncertainty. This year has proven no different. Across the market, growth stocks have fallen more than 30% year to date. In contrast, many dividend stocks have either traded flat or find themselves valued higher than where they were at the start of the year. With that said, here are three top dividend stocks to buy in March 2022.
Start with the banks
Well, it’s official. After months of speculation, the Bank of Canada announced that it would be increasing its overnight lending rate by 0.25%. This brings the rate to 0.5%. Economists anticipate that this is only the first raise of many. Although this may sound like bad news, it’s actually great news for banks. Historically, banks (and other companies in the financial sector) have seen a widening in profit margins as interest rates rise. As such, buying shares of one of Canada’s top banks makes sense this month.
Of the Big Five Canadian banks, my top choice is Bank of Nova Scotia (TSX: BNS)(NYSE: BNS). It is known as a Canadian Dividend Aristocrat, after having raised its dividend distribution for more than a decade. Even more impressively, Bank of Nova Scotia hasn’t missed a dividend payment in 189 years! If you’re looking to add a dividend stock to your portfolio, Bank of Nova Scotia should be a frontrunner.
Investing should be boring
To paraphrase Warren Buffett, just because a company’s business isn’t exciting doesn’t mean its stock can’t perform incredibly over the long run. In fact, some of the best companies to hold have “boring” business models. Take insurance companies for example. These companies aren’t attracting investors because of their innovative platforms and technology. Instead, it’s the appeal of consistent cash flow. Insurance companies receive a steady and predictable source of revenue from their customers.
Manulife Financial (TSX: MFC)(NYSE: MFC) stands at the top of my list, when it comes to Canadian insurance companies. With more than $1 trillion of assets under management, it’s the largest insurance company in the country. Another Canadian Dividend Aristocrat, Manulife has managed to increase its distribution for the past seven years. It currently offers investors a very attractive forward dividend yield of 5.31%.
This stock has been consistently reliable
Canadian National (TSX: CNR)(NYSE: CNI) has been in business for more than a century. Since its founding, it has played a crucial role as the backbone of Canada’s economy. It may be fair to say that Canada wouldn’t be the same country we know it as today without the services that Canadian National provides. This is a very strong company that could continue to be in high demand over the next decade. There are no viable methods to transport large quantities of goods long distances other than via rail.
Like the other two companies mentioned previously, Canadian National is listed as a Canadian Dividend Aristocrat. Its dividend-growth streak stands at 25 years, making it a top 10 company in Canada in that regard. Although its forward dividend yield is quite low (1.93%), so is its payout ratio (35.7%). This suggests that Canadian National has enough room to continue comfortably increasing its distributions in the future.
