Are These the Best Canadian Dividend Stocks for a High-Rate Environment?

Are you looking for some of the best Canadian dividend stocks to buy? Here are two top picks for decades of income.

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The market volatility that we’ve seen over the past year has pushed some Canadian dividend stocks into discount territory.

Here’s a look at several of those great Canadian dividend stocks and why they belong in your portfolio right now.

Defence aside, this is a great income stock

Fortis (TSX:FTS) is one of the most defensive stocks on the market. For those unfamiliar with the company, Fortis is one of the largest utilities in North America. The utility boasts 10 operating regions that span across Canada, the U.S., and the Caribbean.

Utilities are some of the best defensive investments on the market. They generate a reliable revenue stream that is backed by long-term, regulated contracts. They also invest in growth initiatives while paying out a handsome dividend.

In terms of growth, Fortis has taken an aggressive stance on expansion. In recent years, expansion efforts have turned to upgrading and transitioning facilities over to renewables. This is an important point to consider, particularly during a high-rate environment where acquisitions are especially costly.

To put it another way, Fortis’s emphasis on existing facilities further enhances the defensive appeal of the stock.

Turning to dividends, Fortis currently offers a very tasty quarterly dividend that boasts a 4.24% yield. This means prospective investors who drop $40,000 into Fortis can expect to generate an income of just $1,700.

And that’s not even the best part.

Fortis has provided investors with annual bumps to that dividend for a whopping 50 consecutive years. The company has planned to continue that practice through the next few years. This fact alone makes Fortis one of the best Canadian dividend stocks to consider buying for the long term.

Oh and let’s not forget what makes Fortis one of the best Canadian dividend stocks right now. The stock currently trades up just 3% this year. This makes it an ideal time to buy a great long-term stock for any well-diversified portfolio.

Banking on a recovery

It would be nearly impossible to mention some of the best Canadian dividend stocks and not mention at least one of Canada’s big banks. And the big bank that investors should be looking closely at right now is Bank of Montreal (TSX:BMO).

BMO is the oldest of Canada’s big banks, and, as a result, has been paying out dividends for nearly two centuries without fail. Today the yield on that quarterly dividend is a respectable 5.18%. Investors who allocate $40,000 to BMO can expect to generate an income of $2,065.

And like Fortis, investors who aren’t ready to draw on that income can opt to reinvest those dividends to let them grow until needed.

Prospective investors should note that while BMO is one of the great Canadian dividend stocks to buy, the bank is also a great growth option.

Earlier this year, BMO completed the acquisition of California-based Bank of the West. In doing so, BMO catapulted into position as one of the largest banks in the U.S. market. Specifically, the bank now has a presence in 32 state markets.

The deal also added hundreds of new branches to BMO’s sprawling U.S. network and billions in loans and deposits.

Despite that immense long-term potential, BMO still trades down nearly 10% over the trailing 12-month period. This makes the bank not only one of the best Canadian dividend stocks to buy but also a discounted gem right now.

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 Demetris Afxentiou has positions in Fortis. The Motley Fool recommends Fortis. The Motley Fool has a disclosure policy.

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