If you’re starting the journey toward financial freedom, you must remember that it’s not an overnight endeavour. To expect solid returns on your investments in the long run, you may want to stick to the Foolish Investing Philosophy by taking the long-term approach.
And if you really want to expedite the process, you can consider investing a large portion of your portfolio in some high-quality, dividend-yielding stocks. It will help you not only minimize your risks but also earn handsome passive income from their dividends.
In this article, I’ll talk about two of the best Canadian dividend stocks to buy in 2023. With these stocks, you can expect to generate extra income for years. That’s why calling them Canadian dividends machines wouldn’t be inaccurate.
Transcontinental stock
Based on its impressive top-line growth in recent years and strong fundamental outlook, Transcontinental (TSX:TCL.A) could be worth considering for investors seeking passive income in Canada. It’s a Montréal-headquartered packaging and printing company with a market cap of $1.3 billion, as its stock trades at $14.47 per share with 5.6% year-to-date losses. At the current market price, Transcontinental stock offers an attractive 6.2% annualized dividend yield and distributes its dividend payouts every quarter.
Two key factors that make Transcontinental a great dividend stock to own for the long term are its over four decades of successful experience in its domain and its diversified revenue streams, including flexible packaging, printing, and media segments.
In the second quarter of its fiscal year 2023 (ended in April), the company posted adjusted earnings of $0.45 per share and $747.2 million in revenue, exceeding analysts’ top- and bottom-line estimates. While the ongoing macroeconomic challenges have affected its earnings growth in recent years, Transcontinental has still managed to maintain a strong revenue-growth rate with the help of its continued focus on quality acquisitions.
Moreover, Transcontinental’s ability to transfer higher inflationary and raw material costs to customers reduces its risk profile, making it an attractive dividend stock to buy for the long term.
Scotiabank stock
Bank of Nova Scotia (TSX:BNS) is another top Canadian dividend stock you can consider adding to your portfolio in 2023. This Toronto-headquartered bank has a market cap of $77 billion, and its stock currently trades at $64.65 per share with a minor 1.5% year-to-date decline. BNS stock offers a strong 6.6% annualized dividend yield at this market price. And like Transcontinental, it also distributes its dividend payouts on a quarterly basis.
To give you an idea about the strength in its long-term financial growth trends, Scotiabank’s revenue jumped 15.7% to $31.4 billion in the five years between its fiscal year 2017 and 2022 (ended in October last year). Despite facing the heat of COVID-19-driven challenges in between, the bank’s adjusted EBIT (earnings before interest and taxes) also rose 19% during the same period to $15 billion. More importantly, its fiscal year 2022 adjusted EBIT margin stood strong at 47.7%, reflecting its ability to maintain strong profitability, despite economic challenges.
While the recent U.S. regional bank crisis has worried bank investors lately, Scotiabank’s solid liquidity position, diversified operations, and consistent client-focused growth initiatives make it a trustworthy Canadian dividend stock to invest in for years to come.
