Investing in Canadian dividend stocks could be a great way to multiply your savings by the time you retire. This way, you could not only earn reliable passive income from dividends but also expect handsome capital gains on your investments in the long run.
In this article, I’ll highlight two ultra-high-yield dividend stocks in Canada that you can buy now with the aim of retiring with financial freedom.
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Labrador Iron Ore Royalty stock
Labrador Iron Ore Royalty (TSX: LIF) is a Toronto-headquartered royalty firm that owns more than 15% equity interest in the Iron Ore Company of Canada (IOC). That’s why its financial progress primarily depends on IOC’s premium iron ore pellets and high-grade concentrate production and export growth.
Labrador currently has a market cap of $1.9 billion, as its stock trades at $29.37 per share after witnessing 12.5% value erosion in 2023 so far. At this market price, LIF stock offers an ultra-high 8.9% annualized dividend yield and distributes its dividend payouts every quarter.
Even as IOC faced COVID-19-driven operational challenges in between, Labrador Iron Ore Royalty’s revenue rose 47% in the five years between 2017 and 2022. In addition, strengthening commodity prices also boosted its adjusted earnings by 69% during the same five-year period.
It’s true that recent declines in commodity prices could affect Labrador’s financial performance in the near term. And this expectation also reflects in its year-to-date share price movement. Nonetheless, LIF is still one of Canada’s most desirable dividend stocks for the long term, as IOC continues to focus on improving its operational performance to boost margins and investing further to increase production levels.
Superior Plus stock
Superior Plus (TSX: SPB) could also be a fundamentally strong Canadian dividend stock with high yields to consider right now. This energy sector-focused diversified business firm primarily focuses on distributing and marketing propane and distillates across North America. SPB stock currently has a market cap of $2.5 billion, trading at $10.16 per share with about 9.5% year-to-date losses. It offers an impressive 7.1% annual dividend yield at the current market price.
Despite a 7% year-over-year decline in revenue, Superior Plus posted an adjusted net loss of $46.1 billion in the second quarter this year, significantly better than its adjusted net loss of $91.2 million a year ago. With this, its latest quarterly bottom line was also more than 20% better than analysts’ expectations.
I find its long-term growth outlook bright as Superior continues to focus on improving operational performance and new acquisitions. For example, its recent acquisition of the Canadian compressed natural gas distributor Certarus had a positive impact on its latest quarterly results, which was also one of the key reasons why Superior Plus raised its 2023 outlook.
Moreover, Superior Plus’s resilient and largely predictable cash flows, along with its leading position in the North American low-carbon energy distribution segment, make its stock worth buying on the dip.
Could these dividend stocks help you retire a millionaire?
While dividend investing might not double or triple your money overnight, it can help you create a reliable passive-income stream and build wealth steadily. Whether or not these high-yield Canadian dividend stocks could help you retire a millionaire largely depends on your investing approach and portfolio size.
That said, if you can buy these stocks when they are down due mainly to temporary macroeconomic challenges and hold them for at least the next 20 years, you can certainly expect to receive outstanding returns on investments.
