Adding dividend stocks to any portfolio can help to stabilize and increase the returns of any portfolio. Indeed, roughly half of the long-term total-return investors gets tends to come in the form of dividends. Thus, having high-quality dividend stocks as a portion of one’s overall holdings can significantly increase an investors’ return over the long term.
For those beginner investors looking for where to start, the search can be daunting. There are thousands of dividend-paying stocks out there to choose from globally.
With that said, there are some top Canadian dividend stocks I think are worth buying right now. Thus, for those looking to stay close to home, here are two top income-generating stocks to consider.
Top dividend stocks to buy: Dream Industrial REIT
Dream Industrial REIT (TSX:DIR.UN) is a leading real estate investment trust (REIT) I’ve had on my radar for some time. With nearly 47.3 million square feet worth of income-producing properties in key global markets like Canada, the U.S., and Europe, this is a real estate stock I’d put in the blue-chip category.
This REIT allows investors who want to gain exposure to industrial real estate (warehouses and logistics locations, mainly) with the ability to do so. Many of these locations can cost millions of dollars to acquire. Thus, the average investor (and even many who would consider themselves wealthy) are likely excluded from this particular real estate asset class.
With a REIT, investor funds can be pooled together to invest in growth properties. In return, investors receive at least 90% of the net operating income of the trust in the form of distributions.
For Dream Industrial, the current dividend yield sits at around 4.8%. Better, investors can gain access to this trust at a price-to-earnings ratio of less than six times. That’s dirt cheap.
Industrial real estate is one sector I continue to pound the table on. This is an asset class with strong secular tailwinds from e-commerce and other high-growth areas of the economy. Thus, for beginner investors looking for dividend stocks to start with, this is a great one to choose.
Fortis
Another company I’d put among the best dividend stocks for beginner investors to buy is Fortis (TSX:FTS). This Canadian multinational gas and electricity utilities holding firm is among the most stable and steady Canadian stocks out there. Notably, Fortis’s operations span into the U.S. and Caribbean, meaning the company isn’t a pure play on domestic growth.
The key reason I like Fortis is the company’s dividend. Interestingly, it’s not necessarily Fortis’s yield that excites me (3.9% isn’t too bad, after all). Rather, it’s Fortis’s streak of nearly five decades of continuous dividend increases that I think makes this stock a no-brainer.
Any time a company increases its dividend over the course of five decades, you know it’s a stable gem. The ability of Fortis to withstand multiple recessions over the past five decades means that even if a recession is on the horizon, this is a company that’s defensive enough to hold its own.
Additionally, this fact highlights the stability of Fortis’s cash flows. The regulated utilities business is among the most stable in terms of cash flow. That’s largely because the company’s clientele won’t ever stop paying their bills (unless they want their lights and heat shut off). As a result, investors can rely on the company’s revenue and earnings growth over time (regulated utilities are allowed to raise prices at a stipulated rate).
Over the long term, I think these two Canadian dividend stocks are great holdings for any investor — for beginner investors, even more so.
