When it comes to building a stream of passive income, dividend stocks are an excellent choice. And fortunately for Canadian investors, the TSX is loaded with top-quality dividend stocks to choose from.
Whether you’re looking for a high-yield or a dependable payout, there are likely at least a couple of dividend-paying companies for you.
For those already in retirement, dependability may be near the top of the list when evaluating a dividend stock. But in addition to dependability, there are other factors to consider when building a passive-income portfolio.
I’ve reviewed three different dividend-paying companies that all have something a little different to offer. For any dividend investors that are just starting out, this is a great basket to build a passive-income portfolio around.
Bank of Nova Scotia
When it comes to building a passive-income portfolio, you’d be wise to consider owning at least one of the major Canadian banks. The Big Five own some of the top yields on the TSX, in addition to some of the longest payout streaks around.
At a dividend yield of close to 6.5% right now, Bank of Nova Scotia (TSX:BNS) ranks as the highest-yielding among the Canadian banks.
The yield alone is enough of a reason to have this dividend stock on your watch list. But then there’s the dependability you also need to factor in. Bank of Nova Scotia has been paying a dividend to its shareholders for close to 200 consecutive years.
Good luck trying to find another dividend yielding above 5% that can also come anywhere near close to matching a 200-year payout streak.
Telus
One of the country’s largest telecommunications providers could be another lucrative add for passive-income investors.
At today’s stock price, Telus’s (TSX:T) dividend is yielding more than 5.5%. It may not be able to match what Scotiabank offers right now, but then again, not many dividend stocks can.
A discounted price is another reason to consider investing in Telus today. The nearly 30% drop from all-time highs is certainly one reason for the increased dividend yield right now. However, it could prove to be a long-term growth driver when the stock decides to turn around.
Patient dividend investors looking that are also interested in driving growth should keep their eyes on Telus.
Northland Power
Speaking of dividend stocks with growth potential, Northland Power (TSX:NPI) offers investors a rare mix of a top dividend yield and market-beating growth potential.
Like many other renewable energy stocks, shares of Northland Power have been on the decline for much of the past two years. The energy stock is down close to 50% since the start of 2021. As a result, the yield has jumped up to more than 4%, understandably increasing interest amongst passive-income investors as of late.
But dividends aside, Northland Power could also be a long-term growth driver. This is a stock that was a consistent market beater during its first decade as a publicly traded company. But after shares have continued dropping in 2023, the stock has underperformed the market over the past five years.
The long-term rise in demand for renewable energy is evident. I believe that Northland Power stock got too far ahead of itself in 2019 and 2020 and has since been paying the price for that.
Long-term investors that are bullish on the rise of renewable energy won’t want to miss out on this opportunistic discount.
