Dividend Dazzlers: 2 Canadian Stocks That Outperform the Market and Pay You Cash

Who says dividend stocks can’t also drive growth? Here are two high-yield dividend stocks with long-term, marketing-beating growth potential.

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When it comes to investing in dividend stocks, Canadians can certainly have their choice. The TSX is loaded with top-quality, dividend-paying companies. Whether you’re in search of a dependable payout or a top yield, or both, the TSX has you covered.

Some investors may be willing to sacrifice a less dependable payout or lower yield for the chance to earn marketing-beating growth. Those types of dividend stocks may be harder to come back by on the TSX. If you look hard enough, though, you surely will be able to find at least a couple.

I’ve reviewed two dividend stocks that not only pay a top dividend but have also driven market-beating returns in the past.

Brookfield Infrastructure Partners

Investors in search of dependability would be wise to start in the utility sector. Dividends aside, utility stocks can be a top choice for anyone looking to add some defensiveness to their portfolio. The low levels of volatility, which are typical for utility stocks, can help balance out a portfolio during inevitable rough periods in the stock market.

In addition to defensiveness, utility companies are no strangers to paying dividends, and high-yielding ones at that too.

At a market cap of more than $20 billion, Brookfield Infrastructure Partners (TSX:BIP.UN) is a Canadian leader in the utility space that also boasts an international presence. 

The company’s dividend is currently yielding close to 4.5% at today’s stock price. A yield like that is enough of a reason alone to be investing in Brookfield Infrastructure Partners. But once you factor in the market-beating growth potential, this is a top buy for passive-income investors.

Over the past five years, not even including dividends, shares of Brookfield Infrastructure Partners are up more than 30%. In comparison, the S&P/TSX Composite Index has returned just over 20%.

Northland Power

It may not be as obvious as the utility sector, but renewable energy is another place where dividend investors can also find market-beating growth potential.

Shares of Northland Power (TSX:NPI) have been on the decline as of late, but the company does have a history of outperforming the market. The stock has dropped nearly 40% since the beginning of 2021, providing investors with a return of just about 10% over the past five years, excluding dividends. 

The renewable energy stock has underperformed in recent years. Going back over the past 10- and 20-year periods, though, Northland Power has been a market-beating performer.

With the recent price drop, Northland Power’s yield has jumped up to above 4%. 

The sector as a whole has been on the decline since early 2021. That’s partially to blame for Northland Power’s poor stock price performance over the past couple of years. Canadian investors won’t find many renewable energy stocks trading near all-time highs right now.

For the long-term investor, now could be an incredibly opportunistic time to be loading up on a discount dividend stock like this one. The renewable space is loaded with long-term growth potential, providing plenty of upside for patient investors. And in the meantime, while the stock rebounds, there’s a 4% dividend yield to benefit from.

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.

Fool contributor Nicholas Dobroruka has no position in any of the stocks mentioned. The Motley Fool recommends Brookfield Infrastructure Partners. The Motley Fool has a disclosure policy.

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