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.