There’s never a bad time to think about building a stream of passive income. And that’s especially true during times of volatility, which Canadian investors have had no shortage as of late. A steady stream of passive income can help soften the impact of inevitable volatile periods in the stock market.
Fortunately, there’s no shortage of dividend stocks to choose from on the TSX. Whether you’re looking for a high yield or a dependable payout, there’s at least one dividend stock that’s right for your portfolio.
With that in mind, I’ve reviewed three dividend-paying companies that are perfect for a long-term investor. Together, the basket of companies can provide a mix of diversification, growth potential, and, of course, a whole lot of passive income.
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Dividend stock #1: Toronto-Dominion Bank
The Canadian banks are a great place for a dividend investor to build out their watch list. The Big Five are all currently paying top yields and own some of the longest payout streaks on the TSX.
At a market cap of $150 billion, Toronto-Dominion Bank (TSX:TD) is the second-largest of the Canadian banks. But it’s the bank’s U.S. exposure that has me ranking it near the top of the list of must-own dividends stocks.
TD Bank shareholders gain instant exposure to both Canadian and U.S. economies, providing much-needed diversification in an investment portfolio.
The dividend itself is also a reason to choose this bank over other dividend-paying companies. At today’s stock price, TD Bank’s dividend is yielding just shy of 5%.
Dividend stock #2: Fortis
There’s not a whole lot to get excited about with the utility industry. When it comes to investing, though, there’s absolutely nothing wrong with being boring.
What this stock may lack in excitement it sure makes up for in dependability. The beauty of the utility sector is the predictability of revenue. As that typically remains stable for utility companies, at least in comparison to other industries, volatility in the stock price tends to remain fairly low.
Similar to TD Bank, Fortis (TSX:FTS) is a major Canadian player that also boasts a strong U.S. presence.
If you’re looking for a low-risk dividend stock that you can count on year after year, Fortis is the company for you.
The company’s dividend is yielding close to 4.5% at today’s stock price.
Dividend stock #3: Northland Power
The last pick on my list is a beaten-down renewable energy stock.
Excluding dividends, shares of Northland Power (TSX:NPI) are down a whopping 50% from all-time highs set in early 2021. That puts the energy stock barely in positive territory over the past five years, also lagging behind the broader market’s returns.
The renewable energy sector as a whole has taken a beating over the past three years. It’s very possible that it ran up far too quickly and investors are now paying the price for that.
As long as you’ve got a time horizon that allows you to be patient, now’s a great time to be loading up on market leaders like Northland Power. And at least while investors wait for the stock to get back on track, at least there’s a 5% dividend yield to enjoy.
