The Best Canadian Dividend Stocks to Buy During a Market Downturn

Given their solid underlying businesses and stable cash flows, these three Canadian dividend stocks are excellent buys during the economic downturn.

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After making a bright start to November, the Canadian benchmark index, the S&P/TSX Composite Index, has been under pressure over the previous two days. The falling commodity prices have weighed on the index, which has lost 1% in the last two days. Sticky inflation and the ongoing Israel-Palestine conflict have also created volatility in the equity markets.

However, investors can strengthen their portfolios by investing in quality dividend stocks that are less susceptible to market fluctuations. Meanwhile, here are my three top picks.

Pizza Pizza Royalty

Pizza Pizza Royalty (TSX:PZA) is one of the top Canadian dividend stocks to buy right now due to its stable and predictable cash flows. It operates a highly franchised restaurant business, collecting royalty from its franchisees based on their sales. So, high inflation has not hurt its royalty pool income. Higher same-store sales growth and restaurant network expansion have boosted the company’s financials.

Its same-store sales grew by 9.8% in the first three quarters, while its restaurant network increased by 21 units. Amid these growth initiatives, the company’s adjusted EPS (earnings per share) grew by 12.3%. Also, the company’s board recently approved a 3.3% increase in its monthly dividend to $0.0775/share, an eighth increase since April 2020. Its forward yield stands at 6.65%.

Further, the company’s restaurant network expansion and old restaurant renovation initiatives could continue to drive its financials in the coming quarters, thus allowing it to continue rewarding its shareholders with healthier dividends.


Second on my list is Fortis (TSX:FTS), a gas and electric utility company serving around 3.4 million customers. With 99% of regulated assets, the company generates stable and predictable financials irrespective of the market environment. Supported by its innovation and solid operational execution, the company has maintained its operational expenses growth at a CAGR (compound annual growth rate) of 2% for the previous five years, which is encouraging.

The utility company, supported by its stable cash flows, has raised its dividends uninterruptedly for 50 years. Also, the company has planned to invest around $25 billion over the next five years, growing its rate base at a CAGR of 6.3%. Of these investments, around 82% has been on risk-free smaller projects, while the remaining 18% is in major capital projects. Given its growth prospects, Fortis expects to raise dividends at a 4-6% CAGR through 2028. So, I believe Fortis would be an excellent bet in a volatile environment.


BCE (TSX:BCE), one of the top telecom players in the Canadian market, is my final pick. Telcos generate stable cash flows due to growing demand amid digitization and their recurring revenue streams. The steady cash flows have allowed them to reward their shareholders by raising dividends consistently. BCE has increased its dividends by over 5% annually for the previous 15 years, with its forward yield at 7.26%.

Meanwhile, BCE has continued expanding its 5G and 5G+ services nationwide while growing its high-speed broadband infrastructure to capture the growing demand. The company’s management expects its 5G and 5G+ to reach 85% and 46% of Canadians by the end of this year. Also, it expects to add 650,000 new direct fibre locations this year. So, these growth initiatives could drive its financials while allowing the company to maintain its dividend growth.

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 Rajiv Nanjapla has no position in any of the stocks mentioned. The Motley Fool recommends Fortis. The Motley Fool has a disclosure policy.

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