In a market downturn, dividend stocks can potentially shelter your portfolio as well as provide you with dividend income. But it’s crucial to own the right stocks to ensure preservation of capital and maximize dividend income. Ideally, we should find the best Canadian dividend stocks that are the most resilient and immune to a market downturn.
In this article, I will explore three Canadian dividend stocks to buy today.
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Fortis: Yielding 4.26%
I have talked a lot about Fortis Inc. (TSX:FTS) in the last few years. This is because Fortis is one of the best Canadian dividend stocks to buy in a market downturn, which was looking increasingly likely.
And today, this is where we’re at – a market downturn. Thankfully, however, it’s not too late to buy Fortis stock. In fact, as you can see from Fortis’ stock price graph below, it’s trading 15% lower than its 2022 highs. It’s also yielding a generous 4.26%.
But why is Fortis stock one of the best Canadian dividend stocks to buy during this downturn? Well, it’s quite simple. Fortis is a utility company. As such, 99% of the company’s assets are regulated. This means steady, reliable revenue streams. Also, Fortis supplies power, which is essential regardless of the economic environment. So inelastic demand mixed with regulated, stable revenue translates into a resilient dividend stock to buy today.
Enbridge stock is yielding 8%
As one of Canada’s leading energy infrastructure companies, Enbridge Inc. (TSX:ENB) has sure had an interesting few years. But at the end of the day, the bottom line is that Enbridge stock has a long history of generating stable, growing cash flows and dividends.
In fact, Enbridge has 28 years of annual dividend increases under its belt. During this time period, its annual dividend has grown at a compound annual growth rate (CAGR) of 7.25%, to the current $3.55 per share. Essentially, the dividend today is 1,320% higher than it was in 1995. Also, Enbridge’s stock price is 282% higher than 20 years ago.
In addition to this, Enbridge has a diversified cash flow profile that’s pretty safe and secure. In fact, 98% of the company’s EBITDA is underpinned by long-term contracts or “take or pay” contracts (with the added feature of inflation protection and cost sharing provisions).
Also, Enbridge stock’s dividend yield is a whopping 8% and Enbridge’s stock price is significantly undervalued (trading at a mere 15 times this year’s earnings). All of this makes it one of the best Canadian dividend stocks to buy now.
BCE: Yielding 7.4%
Finally, BCE Inc. (TSX:BCE) is Canada’s largest telecom services company. BCE stock is another one of the best dividend stocks to buy in a market downturn for a few simple reasons. Firstly, it has been one of the most reliable TSX stocks for decades. Also, its business is defensive, its cash flows are predictable, and today, it’s yielding a very generous 7.4%.
Let’s take a look at BCE stock’s track record for some more colour on how it has performed. Since 2000, BCE’s dividend has grown at a compound annual growth rate (CAGR) of 6.22%. Today, the dividend is 223% higher than in 2000. Also, BCE stock has risen 78% – not bad for a low-risk, steady, and predictable stock.
In a market downturn, BCE’s unmatched network and financial resources will most likely ensure that the company and the stock will come out of it relatively unscathed. Thus, it’s one of the best Canadian dividend stocks to buy now.
The bottom line
We are already in a market downturn. Those of us who own the stocks I’ve discussed in this article are doing quite well – receiving dividend payments while seeing that capital is being preserved quite nicely.
For those of us who don’t own any of these stocks, rest assured. You still have time to buy and gain exposure to one or more of the best Canadian dividend stocks to own today.
