Income Investors: These 3 Canadian Dividend Stocks Are Timeless Gems

Here are three of the top income stocks long-term investors may want to consider on any pullbacks, given their yield and growth potential.

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Are you an income investor and looking forward to investing in some of the best dividend stocks Canada has to offer?

Well, the good news is that there are plenty of options to choose from. In this article, I’ve picked three defensive companies with solid cash flows and dividend yields (as well as dividend-growth potential) to consider.

Let’s dive in!

Royal Bank of Canada

Royal Bank of Canada (TSX:RY) is the largest bank in Canada and one of the top 10 in the world. In terms of its market capitalization, it ranks among the leading banks in the world and is the largest company in Canada. RBC offers an extensive range of financial services such as insurance, wealth management, capital market services, treasury, etc. RBC primarily has its presence in Canada but also operates in Europe, the United States, and other countries.

RBC’s value really comes from its size and global scale relative to its Canadian banking peers. Unlike many Canada-based bank stocks, RBC isn’t overly exposed to Canada’s housing market and has plenty of diversification via its global wealth management and capital markets business to offset short-term weakness in other areas. It’s this scale and diversification I like, and it’s why RY stock remains a top pick among many investors.

From a dividend standpoint, RBC also stands out with its 4.1% yield. This yield is lower than many of its peers due to the relative safety RBC provides. That said, at a trailing price-to-earnings ratio of just 12.7 times, Royal Bank remains a top value pick as well, with plenty of room to hike its dividends in the future.

Fortis

Fortis (TSX:FTS) is a top Canada-based utilities company providing natural gas and electricity to more than three million customers in North America. Fortis also owns and operates 10 utility and transmission and distribution assets across Canada and the United States.

Fortis has future plans to expand its base rate with an aim to boost earnings and dividend payouts. For those seeking a top-tier dividend yield of 4.3% backed by some of the most consistent cash flows in the business, Fortis is a great choice.

Notably, Fortis has also recently announced electric rate updates, which investors may find appealing. Ongoing investments and rate increases, which offset rising costs, provide the company with a stable balance sheet and room to grow its dividend. Importantly, Fortis is a dividend king, having raised its distribution annually for five decades. Thus, from a divided-growth standpoint, this is the Canadian stock to own, in my view.

Enbridge

Enbridge (TSX:ENB) is a Canada-based integrated energy company engaged in the business of transmission, gathering, transportation, and marketing of crude oil, petroleum products, natural gas, etc. It is also involved in the processing of power generation from multiple renewable sources such as geothermal, solar, and wind.

Enbridge caters to both residential and commercial customers in regions like Quebec and Ontario in Canada and New York in the United States. For investors, this stock can be a reliable option to generate dividend income. Enbridge stock is expected to generate a 7.6% dividend yield in the near future. Thus, for investors seeking up-front yield in the pipeline space, ENB stock remains a top choice.

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 Chris MacDonald has positions in Enbridge. The Motley Fool recommends Enbridge and Fortis. The Motley Fool has a disclosure policy.

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