Income Investors, Take Note: These Canadian Dividend Stocks Are on Fire

Here are two rallying Canadian dividend stocks you can buy now, despite broader market uncertainties.

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After the Bank of Canada’s decision to hike interest rates in June, the country’s policy rate has reached its highest level in 22 years. Higher borrowing costs and continued inflationary pressures have once again reignited the fears of a near-term recession. This is one of the key reasons why, despite rallying by 3.7% in the first quarter, the TSX Composite benchmark has seen negative movement so far in the second quarter, trimming its year-to-date gains to only 2.9%.

While these concerns continue to haunt investors, some fundamentally strong Canadian dividend stocks have outperformed the broader market this year. As macroeconomic challenges are likely to keep the Canadian stock market volatile in the coming months, it could be the right time for you to consider adding such quality dividend stocks to your portfolio that can, besides capital gains, help you generate passive income.

In this article, I’ll highlight two rallying Canadian dividend stocks you can add to your portfolio in June 2023.

goeasy stock

goeasy (TSX:GSY) is a Mississauga-headquartered non-prime leasing and lending services provider with a market cap of $1.8 billion. Its stock currently trades at $108.91 per share after rallying by 14.1% in the second quarter of 2023. At this market price, GSY stock offers a decent 3.5% annualized dividend yield.

In the March 2023 quarter, goeasy’s revenue rose 24% YoY (year over year) to $287 million with the help of a solid 58% jump in loan growth and a 39% expansion in its loan portfolio. In addition, credit model enhancements and improved product mix also drove the company’s adjusted quarterly earnings up 14% from a year ago to $3.10 per share. In terms of new customer acquisition, it was a very strong quarter for goeasy as new borrowers accounted for nearly 67% of the credit advanced.

As goeasy’s large scale and operating leverage continue to give it an edge over the competition, you can expect it to continue posting strong financial growth in the coming years, which should help this Canadian dividend stock continue soaring.

Stella-Jones stock

Stella-Jones (TSX:SJ) could be another attractive rallying Canadian dividend stock to consider in June. This Saint-Laurent-based primarily focuses on the manufacturing of pressure-treated wood products. It currently has a market cap of $3.7 billion, as its stock trades at $63.71 per share after gaining 23% value in the second quarter.

While many investors may not find Stella-Jones’s 1.4% annual dividend yield very attractive, its outstanding dividend growth in recent years still makes it worth considering. Notably, the Canadian company has raised its dividend per share by about 89% in the five years between 2017 and 2022.

Despite a pullback in residential lumber sales, Stella-Jones posted a strong 9.1% YoY increase in its first-quarter sales to $710 million with continued strength in its railway ties. More importantly, the strong performance of its infrastructure-related product segments helped the company deliver a strong 41.1% YoY increase in its adjusted quarterly earnings to $1.03 per share.

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.

The Motley Fool recommends Stella-Jones. The Motley Fool has a disclosure policy. Fool contributor Jitendra Parashar has no position in any of the stocks mentioned.

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