The Canadian stock market selloff has intensified in the second half of 2023, as macroeconomic uncertainties due to inflationary pressures, rapidly rising interest rates, and growing geopolitical tensions continue taking a toll on investors’ sentiments. In such uncertain market conditions, having some quality dividend stocks in your portfolio could be of great help.
In volatile market conditions, dividend-paying stocks offer a dual advantage. First, they provide a consistent income stream. Second, shares of well-established, dividend-paying companies are usually more stable and act as a buffer against stock market fluctuations.
In this article, I’ll highlight two rallying dividend stocks you can add to your portfolio that can help you minimize your risks.
Canadian Natural Resources stock
Canadian Natural Resources (TSX: CNQ) is a Calgary-headquartered energy giant with a well-diversified business model and robust balance sheet. The company has a market cap of $96.4 billion, as its stock trades at $88.57 per share with 17.8% year-to-date gains. At the current market price, CNQ stock offers a decent 4.1% annualized dividend yield.
In 2022, Canadian Natural’s annual production rose 4% YoY (year over year) to reach a new record of around 1.28 million barrels of oil equivalent per day. With this, the company posted a 41% YoY increase in its total revenue for the year to $42.3 billion. Higher revenues, along with stronger commodity pricing, helped it deliver an outstanding 79% increase in its adjusted annual earnings to $11.19 per share.
Although factors like weaker commodity prices and lower production due mainly to wildfires in Western Canada have affected its financial growth in the ongoing year, Canadian Natural’s continued focus on the strong execution of its thermal growth plan is likely to push its average third-quarter thermal production higher, which should help its financial growth trends improve in the second half of the year.
Overall, Canadian Natural’s efficient operations, ability to flexibly allocate capital, and solid dividend-growth track record make this Canadian dividend stock worth buying for the long term.
Canadian Western Bank stock
If you’re looking to invest your hard-earned money in some safe dividend stocks, Canadian Western Bank (TSX: CWB) could be another great option on the TSX today. This Edmonton-based lender currently has a market cap of $2.6 billion as its stock trades at $27 per share after rising by 12.2% so far in 2023. The stock offers a 4.9% annualized dividend yield at this market price.
Even as macroeconomic challenges have driven its provisions for credit losses higher in recent quarters, Canadian Western Bank’s proactive loan management, disciplined expense management, and more deposits drove its revenue up by 3.3% in the first three quarters (ended in July) of its fiscal year 2023.
The strength of Canadian Western Bank’s diverse financial services could be understood by the fact that its revenue rose more than 48% in the five years between its fiscal year 2017 and 2022 (ended in October 2022). During the same period, its adjusted annual earnings also grew positively by about 41%. I expect Canadian Western Bank’s financial growth trends to improve in the coming years, as Bank of Canada’s latest round of interest rate hikes seems to be nearing its end.
