There are a few stocks in the Toronto Stock Exchange that can offer defensive appeal and long-term staying power than dividend stocks with defensive moats. Such companies remain in high demand right now, given forward-looking economic uncertainty, which may be brewing on the horizon.
Yes, the economy looks strong (for the time being). However, finding companies that have the ability to continue to provide passive income over time should be the goal.
Here are three such defensive dividend stocks I think investors should consider right now.
Dream Industrial REIT
Dream Industrial REIT (TSX:DIR.UN) is an unincorporated, open-ended real estate investment trust (REIT). Its portfolio comprises industrial properties situated in the major regions of the United States and Canada. The trust’s primary objective is to build and grow its portfolio and offer stable cash distributions to its unitholders.
In 2023, Dream Industrial’s rental income reached $334.2 million, growing 18.7% from the previous year’s $281.6 million number. In addition, the trust’s net income came in at $104.3 million, and its total assets were valued at $7.9 billion as of the end of 2023.
Dream Industrial’s portfolio of high-quality warehouses and distribution centres located near city centres makes this company a prime option for those looking for real estate exposure right now. Indeed, industrial real estate is where I’d look first to capture significant upside in this sector, as it’s one area that will remain in high demand for decades to come.
Like other REITs, Dream Industrial pays out a majority of its net income to shareholders. With a dividend yield of 5.3% at the time of writing, this is a top option for investors seeking passive income or total returns over time.
Fortis
Fortis (TSX:FTS) owns and operates 10 utility transmissions and distribution assets in Canada and the United States. The company serves more than 3.4 million customers in the region, with smaller stakes in electricity generation in multiple Caribbean geographies.
Fortis is one of the best dividend stocks to invest your money in, in my view. The company’s five-decade-long streak of raising its dividend stands out as one of the longest and most viable streaks in Canada. The company aims to continue this streak in coming years, with plans to raise its dividend in the mid-single-digit range.
With a current yield of around 4.4%, Fortis stands as a top utility stock I’d consider owning for the long term. The company’s strong compounded annual growth rate over time, supported by its rising dividend, provides an easy-to-understand investment thesis for those with a long-term investing time horizon.
Toronto-Dominion Bank
Toronto-Dominion Bank (TSX:TD) is one of the largest Canadian banks operating three business segments: Canadian retail banking, U.S. retail banking, and wholesale banking. The bank serves its customers through a comprehensive network of branch offices, online portals, ATMs, and wealth advisors.
In 2023, the bank brought in enormous revenue, which helped TD grow and expand its operations. Toronto-Dominion Bank was the first stock on the Toronto Stock Exchange to pay its investors their dividends. Currently, the bank has a dividend yield of 5%, which supports the stock’s continued track record of providing investors with double-digit annual returns on a pretty consistent basis.
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Notably, TD is also one of the lower-beta bank options in the sector, with a beta of around 0.8. This means the stock moves less in line with overall market trends, making it a more defensive option relative to its peers.
Over time, I expect TD to continue its strong growth trajectory, and continue to provide strong and growing dividends for investors. Accordingly, I think TD stock should play a key role in a well-diversified portfolio right now.
