After consistently sliding for three months in a row, the stock market in Canada stabilized a bit in November 2023, as cooler inflation numbers strengthened the possibility that the Bank of Canada will soon start slashing interest rates. Although the U.S. Federal Reserve in its latest economic projections also pointed towards the possibility of multiple rate cuts in 2024, unpredictable commodity prices amid the ongoing economic uncertainties and geopolitical tensions could still keep most TSX stocks volatile in the near future.
Given such uncertain market conditions, holding some quality Canadian dividend stocks in your portfolio could be of great help. This is mainly because you can expect to earn steady passive income from reliable, large-cap dividend stocks, even if the economic weakness continues to pressure their share prices.
In this article, I’ll highlight two of the best Canadian dividend stocks you can buy amid the ongoing market downturn and hold for the long run.
Hydro One stock
Hydro One (TSX:H) is a Toronto-based utility firm with a market cap of $23.4 billion. The company, through its subsidiaries, runs Ontario’s largest electricity distribution and transmission network. As of December 15, H stock trades at $39.10 per share with 7.8% year-to-date gains.
At the current market price, it offers a decent 3% annualized dividend yield and distributes its dividends every quarter. Besides its dividends, Hydro One’s ability to continue yielding positive returns even in uncertain market conditions makes it a reliable dividend stock to bet on. Interestingly, Hydro One has been delivering positive returns to its loyal investors for the last five consecutive years, despite facing COVID-19-driven big stock market ups and downs in between.
This spectacular rally in Hydro stock in recent years could be attributed to the company’s strong financial growth trends. To give you an idea about that, in five years between 2017 and 2022, revenue rose 30% to $7.8 billion. To add optimism, favourable pricing helped the utility firm increase its adjusted annual earnings by 51% during these five years to $1.75 per share.
In order to meet the growing demand for electricity in northeastern and eastern Ontario, Hydro One now focusing on the construction of new priority transmission lines, which could accelerate its financial growth further in the years to come.
BCE stock
When talking about the most reliable Canadian dividend stocks to hold for the long term, I find the list incomplete without including BCE (TSX:BCE) in it. This stock currently trades at $51.78 per share with about 13% year-to-date losses, trimming its market cap to $47.1 billion. BCE stock has a very impressive 7.5% annualized dividend yield at this market price.
Despite the ongoing economic slowdown, BCE’s total revenue has risen 2.6% year over year in the first three quarters of 2023 combined to $18.2 billion. Even as the company’s fibre internet and wireless segment continued to perform well, its adjusted earnings in these nine months dived 7.2% from a year ago due mainly to the ongoing advertising recession.
As economic growth is likely to improve in the coming years with the Canadian central bank expected to slash interest rates, we can expect this Verdun-headquartered telecommunications giant advertising segment growth to reflect significant advances, which should also help its share prices recover fast.
