Motley Fool readers familiar with my articles will know that I like to focus on growth stocks. However, as I preach in my articles, I tend to hold dividend stocks as a smaller portion of my portfolio. There are two benefits in doing this. First, dividend stocks tend to be less volatile than growth stocks. That could help give a portfolio more stability during market corrections.
The second benefit in holding dividend stocks is that they tend to pay shareholders on a regular basis. That allows investors to supplement their primary source of income. Over time, those dividends could even grow larger than an investor’s primary source of income, allowing them to leave their jobs and spend more time on things they’re passionate about. In this article, I discuss two dividend stocks I continue buying in my tax-free savings account.
One of the largest Canadian banks
The banking industry may be one of the most well-established financial spaces in Canada. The industry has been led by the same five companies for many decades. Of the Big Five, Bank of Nova Scotia (TSX:BNS) stands out as my top pick. This company is known for its international diversification, earning the title as Canada’s most international bank.
Bank of Nova Scotia has famously been paying dividends since July 1, 1833. That represents 189 years of continued dividend distributions. Dividend investors should also be happy to know that Bank of Nova Scotia’s forward dividend yield is very attractive (5.78%). If I could only buy one dividend stock for the next decade, I would likely continue buying shares in this company.
A stock for the future
As businesses and governments continue to see the value in renewable energy, companies like Brookfield Renewable (TSX:BEP.UN) should continue to grow. Currently, this company is one of the largest producers of renewable utilities in the world. Its portfolio consists of $68 billion of assets with a generation capacity of 24GW. Brookfield Renewable also has facilities with a projected future generation capacity of about 102GW in development.
Listed as a Canadian Dividend Aristocrat, Brookfield Renewable has increased its dividend in each of the past 11 years. Over that period, the company has managed to raise its distribution at a compound annual growth rate of 6%. With that dividend growth rate, shareholders have seen their dividends grow at a faster rate than inflation. That’s a key metric to look for when shopping for dividend stocks, as investors should be wary about dividends that end up losing buying power over time.
Like Bank of Nova Scotia, Brookfield Renewable’s dividend comes with a very attractive forward yield (4.93%). Part of the Brookfield Corporation family of companies, I’m very confident that Brookfield Renewable will be able to continue offering investors a fast-growing dividend with an attractive yield for many more years. If you’re looking for a stock that could grow in a changing world, while offering an attractive distribution, Brookfield Renewable is worth consideration.