Canada is known globally for its many steady and reliable dividend stocks. Most of Canada’s largest businesses (in telecommunication, real estate, energy, and banking) pay attractive dividends. If you are looking for safe and predictable dividends, these are the five top stocks you need to know about.
Financial stocks for dividends
Royal Bank of Canada (TSX: RY) is not only one of Canada’s largest companies with a market cap of $186 billion. It also happens to be one of its best-managed banks. With operations in Canada and the U.S. and a diverse mix of services, Royal Bank has been able to deliver steady results over the years.
Over the past decade, it has grown its earnings per share by a steady 6.5% compounded annual growth rate (CAGR). It has grown its dividend per share by an even faster 7.2% CAGR.
Royal Bank has a strong balance sheet. It can be opportunistic to take market share when other competitors are pulling back. As a result, it could do well even through a potential recession. This stock yields a nice 4.2% dividend today.
Utilities/Infrastructure
Utilities and infrastructure stocks are a great place to look for dividend income. They provide essential services that have persistent demand. As a result, much of their income is contracted or regulated.
Fortis (TSX: FTS) is one of the best-quality utilities in Canada. This stock has delivered 50 consecutive years of annual dividend per share growth. As the economy grows, so does demand for its services. It provides the crucial power/gas infrastructure, and it gets a regulated rate of return.
Fortis has clear sight lines to grow by about 6% a year for the next five years. It expects this will translate into annual dividend growth of 4-6% going forward. It yields 4.5% today.
Pembina Pipeline (TSX: PPL) is another good bet if you want energy infrastructure exposure. It has a diversified mix of pipelines, processing facilities, storage, and export terminals. Around 85% of its assets are contracted. This supports its attractive 5.6% dividend yield.
Pembina has a strong balance sheet that should afford it some accretive investment opportunities (LNG terminals, pipeline and processing facility expansion, etc.). Pembina paid its dividend, even when oil prices went to zero, so it can withstand challenging economic environments.
Railroads
Canadian National Railway (TSX: CNR) has provided a great mix of dividend and capital returns over the past two decades. Shareholders who bought CNR after its initial public offering (IPO) in 1995 would be sitting with a 6,277% total return!
Over the decade, this stock has increased earnings per share by a 9.2% CAGR and dividend per share by a 13.6% CAGR. It only yields 1.9% today. However, it has the balance sheet flex to both grow its business and keep raising its dividend by an attractive rate in the years ahead.
Real estate stocks for dividend income
Like its name, Granite Real Estate Investment Trust (TSX: GRT.UN) is about as solid as they come. It operates a portfolio of high-quality industrial and logistics properties in Canada, Europe, and the U.S.
It has a credit-grade tenant mix, long-term leases (plus six years), and solid +95% occupancy. Granite has an industry-leading balance sheet with low leverage and ample liquidity.
This top real estate stock has increased its dividend for 13 consecutive years. That trend isn’t likely to stop. It yields 4.4% today.
