Investors love to buy Canadian dividend stocks for many reasons. Firstly, they provide rock-solid returns, especially when you consider the passive income they provide in addition to the opportunity to earn capital gains.
Plus, in order for a stock to start paying a dividend, it needs to be well established and consistently earning a profit, meaning that dividend stocks are almost never newer, high-risk businesses.
Therefore, because dividend stocks are almost always well-established businesses, there are plenty of companies you can buy that can weather the storm when the economic environment begins to deteriorate. This is especially true when you look for Canadian dividend stocks operating in defensive industries.
Therefore, in the current market environment, there’s no question that some of the best investments you can make today are in reliable Canadian dividend stocks.
So if you’re looking to put some cash to work in this environment, or you’re just looking to increase the safety and stability of your portfolio, here are two top Canadian dividend stocks to buy now.
One of the best Canadian dividend stocks to buy and hold long term
There are many different Canadian dividend stocks to buy that are defensive and reliable. Especially noteworthy are those with lengthy dividend growth streaks on the Canadian dividend aristocrats list.
BCE is an ideal business for many reasons. First off, the services it offers are essential and highly defensive. Whether or not a recession materializes, many consumers and businesses still need access to communications and technology like the internet.
Furthermore, the telecommunications industry has significant barriers to entry, which helps give massive large caps like BCE a significant competitive advantage.
It’s also worth noting that in addition to the resiliency of BCE and its competitive advantage, telecom stocks own plenty of long-life assets that generate billions in cash flow for years. For example, a telephone pole needs a one-time investment to be built and then minimal maintenance expenses over the course of its life. Yet all the while, it’s earning BCE tonnes of cash flow.
This makes a company like BCE one of the best Canadian dividend stocks you can buy because of its reliability. In a recession, it shouldn’t see much impact on its revenue. The telco should continue to generate enough cash flow to continue returning cash to investors.
It’s worth noting, though, that in recent years BCE’s payout ratio has been over 100% as it has been investing hoards of capital into installing new technology, such as 5G equipment and fibre-to-the-home infrastructure.
However, with much of this equipment now installed, the company expects to reduce its capex in the coming years, bringing its payout ratio back below 100%.
It’s also worth noting that BCE has an incredible dividend growth streak of 14 straight years. Plus, the stock’s dividend yield today is over 6.5%.
So if you’re looking for a high-quality Canadian dividend stock that can help boost your passive income and also protect your capital in times of turmoil, BCE is one of the best investments to consider today.
A top defensive stock to help protect and grow your capital
In addition to BCE, another excellent Canadian dividend stock that can weather any storm is Brookfield Infrastructure (TSX:BIP.UN).
Brookfield Infrastructure is an ideal investment because it owns highly defensive assets in several different industries. Moreover, its operations are diversified all over the world, which further reduces risk considerably.
Brookfield owns assets such as utilities, midstream energy operations, data centres, railroads and much more, all essential businesses to their respective economies.
Furthermore, management is always looking for new investments to add to its portfolio, especially assets that it views are undervalued or which can benefit from Brookfield’s operational expertise.
Therefore, not only can Brookfield weather the storm when the economy is struggling, but it also provides attractive passive income that, like BCE, is constantly increasing from year to year.
And with the stock trading almost 20% off its 52-week high, Brookfield now offers an impressive yield of roughly 4.5%, making it one of the best Canadian dividend stocks you can buy today.