Dividend stocks should be very appealing to the everyday investor. This is because, by investing in dividend stocks, you’re able to generate a source of recurring passive income. That could help you supplement, or maybe even replace, your primary source of income. Fortunately, the Canadian stock market contains many outstanding dividend stocks that pay handsomely.
In this article, I’ll discuss three top stocks.
The Canadian banks are excellent dividend sources
When looking for dividend stocks to add to your portfolio, it would be a good idea to consider investing in one of the Big Five Canadian banks. The Canadian banking industry is highly regulated, which makes it difficult for smaller competitors to displace the industry leaders. That makes the Big Five very interesting; their respective moats are very formidable.
Of that group, Bank of Nova Scotia (TSX:BNS) is my top pick. In my opinion, this company’s dedication to international growth is what separates it from its peers. With respect to its dividend, Bank of Nova Scotia is an outstanding stock. The company has been paying shareholders a dividend for about 190 years. As of this writing, Bank of Nova Scotia stock offers investors a forward dividend yield of 6.36%.
Invest in this telecom company
Just like Canada’s banking industry, the Canadian telecom industry features a very small group of companies that have established a very formidable moat. In this case, there are really just three companies that sit at the top of the market. Of that group, I believe Telus (TSX:T) is the most appealing pick. Its coverage area is the largest in the country and accounts for 99% of the Canadian population.
Telus has done an excellent job of raising its dividend over the years. In fact, the company has increased its dividend distribution in each of the past 17 years. With respect to its yield, Telus is also very appealing. Today, investors can take advantage of a 5.72% forward dividend yield.
Investors should consider utility stocks
Finally, investors could do well by buying shares of utility stocks. This is because utility companies tend to generate revenue on a recurring basis. That gives them very stable and predictable businesses. Because of that recurring stream of revenue, utility companies tend to have very strong dividends that can be plan for much ahead of time. In Canada, there are many outstanding dividend stocks that could be worth holding in your portfolio.
When it comes to a utility stock that offers a handsome dividend yield, few companies are able to compete with Emera (TSX:EMA). Not one of the most popular utility stocks, I find that Emera manages to fly under the radar. However, its 5.07% forward dividend yield is something that more investors should pay attention to.
Foolish takeaway
There are many outstanding dividend stocks that trade in Canada. By looking at some stocks that offer investors a high dividend yield, you could generate a stable source of passive income that could help you live more comfortably. In my opinion, Bank of Nova Scotia, Telus, and Emera could be great picks if a handsome yield is something you’re interested in.
