Resilience and Returns: The Dual Appeal of Canadian Dividend Stocks

Are you interested in Canadian dividend stocks? Here are two reasons why many Canadians flock towards them.

| More on:
man touches brain to show a good idea

Source: Getty Images

Investing in dividend stocks is often seen as something that could benefit older investors. That’s because dividend stocks pay shareholders on a recurring basis simply for holding shares in the company. With an additional source of income, older investors are considered prime beneficiaries since they could supplement their incomes in retirement.

However, a passive source of income isn’t the only benefit that dividend stocks can offer. In fact, there’s a second benefit that may be even more important than that. It’s not often said enough that dividend stocks are very resilient. This fact can be seen in their performances during market downturns. Dividend stocks often outperform growth stocks during those periods, which can make them very important additions to a portfolio.

In this article, I’ll discuss two top Canadian dividend stocks and how investing in them could allow you to take advantage of both benefits.

This is one of the best dividend stocks around

When discussing Canadian dividend stocks, it only makes sense to begin by mentioning Fortis (TSX:FTS). For many, especially out west, Fortis is a name you should recognize. It provides regulated gas and electricity to more than three million customers across North America.

In general, utility stocks are great to hold during market downturns. That’s because customers will continue to rely on their services, regardless of what the economy looks like. That results in companies like Fortis not experiencing too many financial difficulties during those times.

In 2022, Fortis stock saw a decline in value of about 6%. While that may be troubling to some, remember that many of the most popular and well-known growth stocks fell by more than 50% during that period. What’s even more impressive is that Fortis continued to grow its dividend distribution throughout the most recent market downturn. The company now boasts a 50-year dividend-growth streak with more increases planned for the coming years.

Another great stock for your portfolio

Investors should also consider adding shares of Canadian National Railway (TSX:CNR) to their portfolios. This is one of the largest companies in Canada and one of the most recognizable names in the country. Canadian National operates Canada’s largest railway, with nearly 33,000 km of track spanning from British Columbia to Nova Scotia. Canadian National also operates in the United States, as far south as Louisiana.

In 2022, Canadian National Railway managed to gain more than 5%. To put that into perspective, the TSX fell about 6% over the same period. That resilience can be traced back to the fact that there isn’t really a solid alternative to transport large amounts of goods over long distances, if not via rail. As such, companies like Canadian National continue to be relied upon in all sorts of economic conditions.

With a dividend-growth streak of 26 years, Canadian National is one of the best stocks in the country when it comes to paying its shareholders. If you’re on the hunt for a stock that could give you solid returns and generate some resilience for your portfolio, look no further.

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 Jed Lloren has positions in Fortis. The Motley Fool recommends Canadian National Railway and Fortis. The Motley Fool has a disclosure policy.

More on Dividend Stocks

Happy couple being attended by office worker at office
Dividend Stocks

New Investors: 3 Top Tips to Get You Started

New investors may be itching to get started, but first, ensure you are properly set up and do your research!

Read more »

A plant grows from coins.
Dividend Stocks

With a 7.9% Dividend, This TSX Stock Can Help You Make $1,975 Per Year

Make steady income with this high yield dividend stock. This Canadian corporation has increased its dividend for 29 years.

Read more »

grow dividends
Dividend Stocks

2 Dividend Stocks to Use as Building Blocks for Lasting Wealth

Dividend stocks that are raising their dividends over time could create lasting wealth for investors. Here are a couple of…

Read more »

Glass piggy bank
Dividend Stocks

New Investors: How to Make the RRSP Work for You Now and Not Just in Retirement

The RRSP can work for you in retirement, but it can also bring huge benefits right now for investors looking…

Read more »

Senior couple at the lake having a picnic
Dividend Stocks

Retirees: 2 High-Yielding Dividend Stocks to Buy Today

These TSX dividend-paying stocks can be a retiree’s best friend in their self-directed portfolios for additional income in retirement.

Read more »

money while you sleep
Dividend Stocks

2 Stable Stocks for Sleep-Better Investing

Boasting rock-solid underlying businesses and great financials, these two stable stocks can be perfect holdings for your portfolio.

Read more »

Dividend Stocks

2 Dividend Stocks to Double Up on Right Now

After their recent declines, these two Canadian dividend stocks look even more attractive to buy for the long term.

Read more »

edit Colleagues chat over ketchup chips
Dividend Stocks

3 Common Investing Mistakes Almost Every Investor Makes

New investors, don't fall into these lesser-known mistakes many make over and over again! Instead, choose this investment for growth.

Read more »