It’s no surprise that tonnes of companies have been struggling over the last year in the current uncertain macroeconomic environment. Many growth stocks, such as tech companies, have felt the most notable impact on their business, but even well-established and high-quality Canadian dividend stocks have seen their business affected.
Of course, the biggest reason for the sell-offs is surging inflation rates. Inflation has been so severe that we haven’t seen levels this high in 40 years.
Inflation at these levels can be devastating to an economy and the stock market. Not only does it increase costs for businesses, hurting margins and profitability, but it also impacts consumers’ ability to spend, which hurts sales for many companies as well.
On top of inflation, rapidly rising interest rates also hurt spending, making it more expensive for stocks to fund growth. Plus, the hikes increase the interest expenses on the debt of these stocks.
However, although most stocks are struggling in the current environment, not every company is being impacted similarly. In fact, some continue to perform well, and even if they are being impacted in some way, continue to grow their profitability as well as their dividends.
So if you’re looking for high-quality stocks to add to your portfolio in this environment, here are three Canadian stocks that just boosted their dividends.
A top Canadian telecom stock that’s ideal for dividend investors
If you’re looking for high-quality, reliable Canadian dividend stocks to buy, a massive blue-chip stock and cash cow such as BCE (TSX:BCE) is one of the best to consider.
BCE has a dominant position in its industry, has a relatively defensive business and constantly earns significant cash flow due to the many long-life assets it owns, making it ideal for passive income seekers.
In fact, BCE is constantly earning so much cash that it can confidently invest billions to grow its 5G and fibre infrastructure to keep its dominant position in the industry. That’s what we’ve seen from the stock the last few years, including through the pandemic.
Even this year, after its recent 5.2% dividend increase, management’s free cash flow guidance implied that BCE’s dividend will have a payout ratio above 100%.
However, BCE has already made massive investments to expand its infrastructure, so in the coming years, when its capex can decline, the dividend should become much safer.
Therefore, if you’re looking for high-quality dividend stocks to buy today, BCE offers a current yield of 6.4% and a dividend growth streak of 13 years, making it one of the best to consider.
A high-quality residential real estate stock
Many Canadian REITs are high-quality dividend growth stocks due to the significant cash flow that these businesses earn. Among them, one of the best stocks to buy and hold for the long term, and one that just increased its distribution once again, is InterRent REIT (TSX:IIP.UN).
It’s worth noting, though, that although InterRent is an excellent investment, and although it has increased its distribution every year for a decade, the stock offers a yield of just 2.5% today.
It has a much lower yield because rather than returning all its cash to investors, InterRent retains cash to invest in continuing to grow the business, which it’s been very successful at.
So if you’re looking for a high-quality Canadian dividend stock that provides both dividend growth and capital appreciation, InterRent is one of the best stocks to consider.
One of the best Canadian growth stocks to buy now
Lastly is goeasy (TSX:GSY) an impressive specialty finance stock that’s been growing its earnings and dividend consistently for years.
goeasy is a stock that’s a lot like InterRent. While it offers a slightly higher yield, just over 3%, goeasy retains the majority of its cash to make acquisitions and continue to expand its loan book.
For example, over the last 12 months, goeasy has reported adjusted earnings per share of $11.55. At the same time, though, goeasy has paid out just $3.64 per share in dividends over that stretch.
Therefore, the fact that goeasy offers a more than 3% dividend yield, yet still retains the majority of its earnings each year to invest in growth makes it one of the best Canadian dividend growth stocks you can buy today.