The Allure of Passive Income: Exploring Canada’s Top Dividend Stocks

Finding top dividend stocks for your portfolio is essential due to the passive income they generate and their potential for capital gains.

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When it comes to building a diversified portfolio of high-quality stocks, owning some of the top dividend stocks in Canada that can provide you with attractive and consistent passive income is one of the most important elements.

A high-quality dividend stock can provide you with significant and attractive passive income while also offering you the potential for capital gains over the long term as you continue to hold the stock.

And all that passive income you earn in the meantime you can use to reinvest in new opportunities, helping you to take advantage of the power of compounding.

So if you’re looking to add some of the top dividend stocks in Canada to your portfolio for 2024, here are a few impressive names to consider.

One of the most defensive dividend stocks in Canada

There are a tonne of dividend stocks you can buy that can help add resiliency to your portfolio while also providing you with passive income. Brookfield Infrastructure Partners (TSX:BIP.UN) is the perfect example.

The stock owns essential infrastructure assets such as pipelines, railroads, telecom towers and utilities and operates in countries all over the world.

This makes Brookfield exceptionally resilient, making it an ideal investment in this market environment.

The consistent cash flow generation allows it to consistently reinvest in expanding its portfolio, as well as increasing the passive income it provides to investors through its distribution.

And right now, the stock offers a current yield of 4.95%, plus it aims to increase its distribution by 5% to 9% annually.

So if you’re looking for top dividend stocks in Canada to buy for 2024, Brookfield Infrastructure is one of the best to consider.

A high-yield energy stock

In Canada, the energy industry is full of dividend stocks for investors to consider, but of all the stocks you can consider, one of the top businesses is Freehold Royalties (TSX:FRU).

Freehold is unique in that it doesn’t produce energy itself but instead collects a royalty from other companies using its land for their own production.

This reduces the amount of capital Freehold has to spend on capex, which leaves it more free cash flow and allows it to pay a higher dividend.

In fact, today, Freehold offers investors a yield of roughly 7.7%, and is expected to payout less than 60% of its free cash flow to fund that dividend.

Not to mention, it continues to acquire new land and expand its portfolio, which only adds to its attractive long-term growth potential.

A top Canadian REIT

The real estate sector is another excellent place to look for high-quality dividend stocks, and one of the highest-yielding REITs to buy now is CT REIT (TSX:CRT.UN).

CT REIT is a retail REIT that is largely owned by Canadian Tire. It also receives roughly 90% of its revenue from Canadian Tire or its subsidiary banners.

And given that Canadian Tire is one of the best-known retailers in Canada and has been growing for years, CT REIT is one of the most defensive retail REITs you can buy.

For example, the pandemic impacted retail REITs significantly, especially with all the lockdowns. CT REIT, though, actually saw growth in revenue every single quarter of the pandemic.

Plus, it offers an attractive yield of roughly 6.1% today. So, if you’re looking for top dividend stocks in Canada to boost your passive income, it’s certainly worth considering.

One of the top dividend stocks in Canada for significant passive income

Last but not least is Pizza Pizza Royalty (TSX:PZA), a stock made for dividend investors.

Pizza Pizza earns a royalty on all the sales at Pizza Pizza and Pizza 73 locations across the country. This means that investors don’t have to worry about the individual stores’ profitability as much, and instead, the focus is on growing aggregate sales across the country.

Plus, because it simply collects a royalty, Pizza Pizza Royalty has almost no expenses. Therefore, often as sales increase, the stock increases its dividend as a result.

Furthermore, because it pays out essentially all of its cash flow, the stock offers an attractive yield of 6.3%.

So if you’re looking to boost your passive income in 2024, Pizza Pizza is certainly one of the top dividend stocks in Canada to look at buying.

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 Daniel Da Costa has positions in Brookfield Infrastructure Partners and Freehold Royalties. The Motley Fool recommends Brookfield Infrastructure Partners and Freehold Royalties. The Motley Fool has a disclosure policy.

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