Canadian dividend stocks have traditionally been a safe place to put your money, especially when the stock market is declining. The S&P/TSX Composite Dividend Index is made up of some of Canada’s largest dividend-paying stocks. It is down 2.5% in the past month and 6.5% for the year. While it is down, it has notably outperformed the S&P/TSX Composite Index, which is down 11.59% for the year.
Long-term investors: Time to load up on top dividend stocks
However, several high-quality dividend stocks have pulled back lately. For short-term investors, that can be upsetting. But for long-term investors, this is a great opportunity to buy top-quality dividend stocks at lower valuations and high dividend yields.
Here are three Canadian dividend stocks that are screaming buys today.
Fortis
Fortis (TSX: FTS) stock has fallen 15% in 2022. Most of that decline occurred in the past 30 days. In fact, today, this stock is trading with an elevated dividend yield over 4.4%. It hasn’t traded with a dividend that high since the March 2020 market crash. Likewise, its price-to-earnings ratio of 17 times is well below its 10-year average of 18.8 times.
Fortis is also a dividend-growth legend. It has grown its dividend for 49 consecutive years. Only a few Canadian stocks have ever reached that benchmark. That is because Fortis has built an extremely resilient business.
With 10 utility operations in its portfolio, Fortis has become a North American leader in regulated power and gas transmission. It provides essential services, so it has a predictable baseline of revenues.
Fortis has a large capital plan that is expected to reap mid-single-digit annual earnings and dividend growth going forward. For a defensive blue-chip stock, Fortis is one you don’t want to miss out on in the recent decline.
Pembina Pipeline
Another infrastructure stock that has recently pulled back is Pembina Pipeline (TSX: PPL). Despite rising 13.5% in 2022, its stock is down 23% since June. Right now, this stock earns shareholders a 6% dividend yield. Pembina just increased its monthly dividend by 3.5% after commencing a new midstream joint-venture project.
Right now, Pembina stock only trades for 15 times earnings, which is close to the lowest it has been in a year. Yet Pembina is operating on all cylinders. The Canadian energy sector is once again booming, and that means more demand for Pembina’s infrastructure assets. Likewise, it gets the benefit of higher margin spreads from re-selling processed energy products.
Given the global energy crisis, Canadian energy (especially LNG) is in high demand. If Pembina can execute, it is set to be a major winner in this space for many years ahead.
Suncor Energy
Even though Suncor Energy (TSX: SU) is up 43% in 2022, it still only trades for seven times earnings and 6.5 times cash flow. There are cheaper stocks in the Canadian energy space, but Suncor is a Canadian leader in oil production and refining.
Last quarter, it produced 720,000 barrels of oil equivalent per day (BOE/d). It has +25-year reserves, and its diverse operations provide significant operational flexibility. The company is currently completing a turnaround strategy. It just sold off its renewable power fleet, and there are rumours it could sell its retail gas station operations at an elevated valuation.
This could unlock a lot of unseen value from today’s stock price. While you wait, this stock earns a 4.2% dividend yield. Suncor raised that 12% this year. Once it hits debt targets, that dividend is likely to increase by an attractive pace.
