With the selloff in many stocks over the course of 2022 and again now in the early months of 2023, plenty of the best Canadian dividend stocks to buy this year are trading at compelling discounts.
Even some of the least-volatile stocks have still declined in value, as interest rates have been increasing, allowing investors with cash today to buy these stocks at lower valuations and lock in higher yields.
It’s important, though, that in addition to finding the best dividend stocks to buy for this environment, you also look for stocks that can perform well for years to come.
So, if you’ve got cash today and are looking to buy top Canadian dividend stocks while they are cheap, and that can give a boost to your passive income, here’s why these three are some of the best to consider in 2023.
One of the best Canadian gold stocks to buy for dividend investors
Now that interest rates appear to be peaking, and with uncertainty continuing to increase in financial markets, gold stocks such as B2Gold (TSX: BTO) have tonnes of potential this year.
B2Gold is one of the top gold stocks to buy and hold for the long haul because it has such low-cost operations. Being able to produce gold cheaper than many of its peers gives it a significant competitive advantage.
It’s also one of the reasons why B2Gold can afford to return so much capital back to investors. Currently, it has a dividend yield of just over 4%.
And while that dividend, as well as its low-cost operations, make it a high-quality investment for the long term, the potential that gold stocks have this year is what makes it one of the best Canadian dividend stocks to buy now.
Already this year, B2Gold has begun to rally and has gained more than 13%. Furthermore, the stock’s average analyst target price is upwards of $7.65 — more than 40% higher than where it trades today.
A top Canadian REIT trading undervalued in this environment
Another of the best Canadian dividend stocks to buy this year, especially while uncertainty in the economy remains high, is a stock like Morguard North American Residential REIT (TSX: MRG.UN).
Residential real estate is considerably defensive, and Morguard, with much of its portfolio in the United States, has significant growth potential.
Already in the last year, Morguard’s revenue grew by more than 13%, and its funds from operations (FFO) increased by over 27% — an impressive performance considering that inflation has pushed the costs for many real estate investment trust (REIT) higher.
So, with Morguard having a well-diversified portfolio of properties, attractive long-term growth potential as well as offering a distribution that’s safe and offers a yield above 4.1%, it’s an ideal investment.
Furthermore, with Morguard trading at a price-to-FFO ratio of just 11 times, below its five-year average of 13.6 times, it’s one of the best Canadian dividend stocks to buy this year.
One of the best Canadian dividend stocks to buy for long-term growth
Lastly, while Dollarama (TSX: DOL) only has a current dividend yield of just 0.35%, it’s certainly one of the best Canadian dividend stocks to buy this year.
Dollarama is one of the few stocks that is actually benefitting from inflation and has shown for years what an incredible growth stock it can be.
As inflation, or even a potential recession on the horizon, impacts consumers’ incomes, it naturally increases the demand for lower-cost goods. Therefore, Dollarama continues to have a tonne of growth potential this year, which is why it’s one of the best dividend stocks you can buy now.
Throughout 2022, Dollarama’s revenue increased by more than 16.5%, and its normalized earnings per share increased by more than 26.5%. This has led to a total return for investors of more than 26% since the start of 2022.
Therefore, considering that the economy continues to face significant headwinds and the fact that Dollarama has proven it can grow in good economic times as well, there’s no question it’s one of the best Canadian dividend stocks to buy in 2023 and hold for years to come.
