If you’re looking to create a reliable source of passive income in Canada, investing in quality dividend stocks could be a great strategy to consider for the long term. Out of all possible ways to earn passive income, dividend investing gives you more freedom to manage your investments without worrying about day-to-day stock market news, which allows you to focus on other aspects of your life. Moreover, dividend investing gives your stock portfolio more stability, as companies that regularly pay dividends are often well-established and financially stable, which makes their shares less volatile than growth stocks.
In this article, I’ll highlight two of the best Canadian dividend stocks you can buy now to start earning handsome passive income.
Stelco stock
Stelco Holdings (TSX: STLC) is a Hamilton-based steel producer with a market cap of $2.4 billion, as this top Canadian dividend stock trades at $43.26 per share with a 2.3% year-to-date loss. At the current market price, STLC stock offers an attractive 3.9% annualized dividend yield and distributes its dividends every quarter.
Although economic worries have driven steel prices downward in the last two years, Stelco’s consistent focus on maintaining low-cost structure is still helping it post better-than-expected financial results.
Last week, on November 8, the company announced its third-quarter results, which reflected the advantage of its low-cost structure. In the September quarter, Stelco’s total revenue fell about 8.3% YoY (year over year) to $776 million. Despite the consistent decline in its average selling price, it delivered adjusted quarterly earnings of $1.38 per share, beating Street analysts’ expectation of $1 per share by a wide margin. That’s why STLC stock rallied by more than 12% a day after its earnings event.
In its latest quarterly earnings conference call, its chief executive officer, Alan Kestenbaum, stated that Stelco has started experiencing stable market demand and a notable upward trend in steel prices in recent weeks. In addition, the company has also secured raw materials at favourable pricing. These demand and cost-related factors are expected to improve Stelco’s financial growth in the next year, which should help this top Canadian dividend stock soar.
BCE stock
For investors looking to earn reliable passive income from dividend investing, BCE (TSX: BCE) could be another reliable stock to consider buying now. This Verdun-based communications giant currently has a market cap of $48.4 billion, as its stock trades at $53.12 per share with about 11% year-to-date losses. Just like Stelco, BCE also distributes its dividend payouts every quarter. However, it has an even more attractive annualized dividend yield of 7.3% at the current market price.
In the third quarter of 2023, BCE’s total revenue rose about 1% YoY to $6.1 billion, despite the ongoing economic challenges. More importantly, its adjusted quarterly earnings before interest, taxes, depreciation, and amortization rose 3.1% YoY to about $2.7 billion with the help of strong performance of its revenue from residential internet, consumer wireless service, and digital media segments.
Although the recent decline in advertising demand and spending has affected BCE’s financial growth in the last year, the company’s robust balance sheet, ongoing transition to 5G technology, and growing demand for its residential internet services brighten its long-term growth outlook.
