Investing in Canadian Dividend Stocks: A Beginner’s Guide

Investing beginners should look to snatch up highly dependable dividend stocks like BCE Inc. (TSX:BCE) and others in 2023.

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Canadian investors who are just starting out on the self-directed path should look to the most dependable dividend stocks on the S&P/TSX Composite Index. Today, I want to look at three of the top income-yielding stocks that beginners can trust for the long haul. Let’s jump in.

Here’s what makes a quality Canadian dividend stock in 2023

Beginners should look to TSX stocks that boasts solid earnings growth projections over the long term, roughly in the 5-15% range. Moreover, these equities should possess strong cash flow, low debt-to-equity ratios, and be established as a force in their respective industry.

BCE (TSX:BCE) is a dividend stock that fits this bill in early May 2023. This Montreal-based communications company provides wireless, wireline, Internet, and television (TV) services to residential, business, and wholesale customers in Canada. Shares of this dividend stock have climbed 7.1% month over month as of early afternoon trading on May 3. The stock is now up 8.3% so far in 2023.

Investors can expect to see this company’s first-quarter (Q1) fiscal 2023 earnings later this month. In fiscal 2022, BCE achieved record new direct fibre connections of 854,000. That powered the highest retail Internet net activations in 16 years. For the full year, BCE delivered operating revenue growth of 3.1% to $24.1 billion. Meanwhile, adjusted net earnings rose 5.6% to $3.05 billion.

This dividend stock currently possesses a solid price-to-earnings (P/E) ratio of 21. Meanwhile, BCE offers a quarterly dividend of $0.968 per share. That represents a strong 5.9% yield. BCE has delivered 14 straight years of dividend growth.

How you can chase high yields without taking on too much risk

Canadian investors who are just starting out might be tempted to snatch up dividend stocks with the highest yields available on the TSX. However, it is worth noting that many of those high-yield options also carry increased risk. Enbridge (TSX:ENB) is a top dividend stock that offers the best of both worlds. This is the largest energy infrastructure company in North America and boasts a huge project pipeline.

Shares of this dividend stock have jumped 1.4% over the past month. The stock is still down marginally in the year-to-date period. Investors can expect to see Enbridge’s Q1 fiscal 2023 earnings on May 5. In fiscal 2022, the company delivered adjusted earnings of $5.7 billion, or $2.81 per common share — up from $5.6 billion, or $2.74 per common share, in fiscal 2021.

Enbridge was trading in middling value territory at the time of this writing. This stock has delivered 27 straight years of dividend growth. It currently offers a quarterly distribution of $0.8875 per share, which represents a tasty 6.6% yield.

This dividend stock is chasing a crown that should make beginners excited

A Dividend King is a stock that has achieved at least 50 consecutive years of dividend growth. Right now, only Canadian Utilities has reached that milestone on the TSX. However, there is another top dividend stock that is ready to snatch that crown.

Fortis (TSX:FTS) is the third dividend stock I’d recommend for investors in early May. This St. John’s-based utility holding company is in elite company among its TSX peers. Its shares have climbed 9.4% so far in 2023.

This company released its first quarter fiscal 2023 earnings this morning. It posted adjusted earnings per share of $0.91 compared to $0.78 in Q1 fiscal 2022. Fortis benefited from strong rate base growth at its ITC and western Canadian utilities, while also delivering improved results at UNS Energy.

Fortis previously unveiled an ambitious $22.3 billion five-year capital plan. This is expected to increase its midyear rate base from $34.1 billion in 2022 to $46.1 billion by 2027. That, in turn, is set to support annual dividend-growth rate between 4% and 6% through the end of the forecast period. Fortis has achieved 49 straight years of dividend growth and currently offers a quarterly distribution of $0.565 per share, representing a 3.7% yield.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Ambrose O'Callaghan has no position in any of the stocks mentioned.

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