It’s pretty evident why investors have exposure to quality dividend stocks. Investing in fundamentally strong dividend stocks allows you to benefit from a stable stream of recurring income as well as long-term capital gains.
There are several things to consider before buying a dividend stock. You should understand that not every company that pays investors a dividend is a good bet. For example, the dividends paid should be sustainable and ideally grow every year. Further, the best dividend-paying companies are those that generate cash flows across business cycles.
I have identified three such Canadian dividend stocks you can buy right now.
goeasy
The first stock on my list is goeasy (TSX:GSY), a Canada-based lending company. GSY stock is down 43% from all-time highs, but it offers investors a tasty dividend yield of 3%. Despite its recent pullback, goeasy has returned 1,640% to investors since September 2012. After adjusting for dividends, total returns are closer to 2,130%.
Headquartered in Mississauga, Ontario, goeasy provides non-prime leasing and lending services. Its portfolio of brands includes easyhome, easyfinancial, and LendCare. It offers a wide range of services that include lease-to-own merchandise, personal loans, auto loans, and home equity loans.
Until now, goeasy has served around 1.2 million Canadians, originating $8.8 billion in loans. Further, around 33% of easyfinancial customer graduate to prime credit while 60% improve credit scores within 12 months of borrowing.
goeasy is part of the highly cyclical lending industry. But it has increased dividend payouts by a stellar 28.5% annually in the last 18 years.
Savaria
A small-cap company valued at $895 million, Savaria (TSX:SIS) offers investors a dividend yield of 3.6%. Savaria stock has returned 750% to investors in the last 10 years. After dividend reinvestments, total returns stand at a whopping 1,110%. In the last five years, dividends have increased by 7% annually.
Savaria is part of a recession-resistant industry and is among the major players in the accessibility segment. It provides solutions for the elderly and physically challenged to enhance their comfort, mobility, and independence.
The company manufactures and distributes equipment, including stairlifts and inclined wheelchair lifts, for home and commercial use. It also manufactures pressure management products, medical beds, and medical equipment to ensure the safe movement of patients.
One of the cheapest stocks on the TSX, Savaria, is valued at 1.3 times forward sales and 23 times forward earnings. Comparatively, Savaria is forecast to increase sales from $661 million in 2021 to $826 million in 2023, while adjusted earnings might more than double to $0.84 per share from $0.37 per share in this period.
Summit Industrial Income REIT
The final stock on my list is Summit Industrial Income REIT (TSX:SMU.UN). The real estate investment trust (REIT) provides investors with a dividend yield of 3.1%. It is one of the top-performing REITs in Canada, returning over 500% to investors in the last 10 years.
Summit Industrial Income delivered a strong quarter to investors in the second quarter on the back of strong portfolio growth, improving occupancy levels, and rental rate increases. Due to its revenue growth, the REIT’s funds from operations surged 39% year over year.
The chief executive officer of Summit Industrial Income REIT emphasized, “Looking ahead, demand remains exceptionally strong in all of our target markets with record low availability rates and significant market rent increases. By capitalizing on these solid fundamentals, we are confident we will achieve another record year of property performance in 2022.”
