Maximize Your Profits: Canada’s Top Dividend Stocks

Two underrated companies are among Canada’s top dividend payers that can help maximize your profits in the stock market.

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Is your dividend investing strategy updated in today’s investment landscape? Holding Canada’s top dividend stocks would be best for getting the most for your money. Keyera (TSX:KEY) and Canadian Western Bank (TSX:CWB) are best to own now because you can maximize profits through generous dividends and price appreciation.

Not all stocks in heavyweight sectors like energy and financials can deliver both. Keyera (+17.16% year to date) outperforms chief rivals Enbridge and Pembina Pipeline, while no big bank stocks can match CWB’s market-beating returns (+23.92%) thus far in 2023.

Investors’ interest not waning

Keyera’s appeal to income investors didn’t wane, despite the company’s changing payout frequency from monthly to quarterly. The energy stock never missed a quarterly dividend payment since 2019, and the annual dividend even increased 4.2% starting the third quarter (Q3) of 2023. If you invest today ($33.08 per share), the dividend yield is a hefty 6.05%.

The $7.58 billion company takes pride in its Key Access Pipeline System (KAPS). KAPS is now in service and fully integrated into Keyera’s value chain. The 575-kilometre-long pipeline transports natural gas liquids and condensate from northwestern Alberta to the company’s natural gas liquids (NGL) infrastructure and condensate network in Fort Saskatchewan, Alberta.

While net earnings in Q3 2023 declined 36.7% to $78.11 million versus Q3 2022, cash flow from operating activities climbed 46.1% year over year to $197.42 million. “We continue to deliver on our strategy, leveraging the strength of our integrated value chain to create value for customers and generate strong returns for shareholders,” said Dean Setoguchi, Keyera’s president and chief executive officer (CEO).

Notably, the distributable cash flow of $186.33 million during the quarter was 14.8% higher than a year ago. Keyera declared $114.57 million in dividends compared to $106 million in the same quarter in 2022.

Setoguchi added, “We continue to grow our fee-for-service business segments, which is improving the quality of our cash flow. KAPS has fully integrated our value chain, making us stronger and more competitive by increasing our ability to attract volumes and maximize value for all stakeholders.”

Because of the improved quality of cash flows and strong business outlook, the S&P Global Ratings gave Keyera a credit upgrade from BBB- to BBB stable. The pipeline operator should be able to maintain a high proportion of stable fee-based or take-or-pay contracts.

Overcoming industry headwinds

Bank stocks should outperform in a high-interest rate environment, especially the giant lenders. Ironically, CWB has done better than its larger industry peers. Besides the astonishing year-to-date return, current investors partake in the 4.59% dividend.

In Q3 fiscal 2023, the $2.77 billion regional bank reported higher common shareholders income ($84.37 million) compared to Q3 fiscal 2022 ($82.87 million). While CWB raised its provision for credit losses (PCL), it was below the bank’s historical five-year average.

Its president and CEO, Chris Fowler, said CWB targets lending opportunities that provide strong returns. The bank also maintains a prudent risk appetite for the current uncertain economic environment. He added that the secured lending model, prudent underwriting practices and proactive loan management should continue to support PCL.

Appealing to dividend earners

Keyera and CWB are appealing because the dividend stocks can maximize profits. Prospective investors invest in both or only one, depending on sector preference.

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 Christopher Liew has no position in any of the stocks mentioned. The Motley Fool recommends Canadian Western Bank, Enbridge, Keyera, and Pembina Pipeline. The Motley Fool has a disclosure policy.

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