Canada is chock-full of dividend stocks. Yet, not all are created equal, and investors need to be cautious about what they buy. Dividend yield should be one of the lowest factors in an investment decision.
Those seeking high dividend yields have been demolished over the past few years. Rather, look for quality stocks that also happen to pay (and hopefully grow) their dividends. Here are five of the best Canadian dividend stocks to look at buying today.
A financial stock with growth and income
goeasy (TSX: GSY) only yields 2.7% today. However, that hardly seems to matter when the stock has risen by 280% in five years and 853% over the past 10 years.
The dividend is still an important part of the return formula for goeasy, though. Its dividend per share has grown by a 30.89% compound annual rate over the past decade!
Earnings per share has increased by a similar rate. That indicates that the dividend is very sustainable and likely to keep growing at the same rate as the business.
As one of Canada’s largest non-prime lenders, goeasy continues to have a large runway to grow its customer base and expand its product assortment. This stock still has a great opportunity for strong total returns ahead.
A top Canadian energy stock for variable dividends
Tourmaline Oil (TSX: TOU) only pays a 1.85% dividend yield. However, that is only for its base dividends. That ignores some of the massive quarterly special dividends that it has been paying over the past three years.
Tourmaline has very low debt, so it has committed to paying out most of its excess cash to shareholders. Its chief executive officer and executive are major shareholders, so incentives are aligned. As as Canada’s largest natural gas producer, it is also one of Canada’s most efficient and profitable energy stocks.
Natural gas has been in the dumps over the past year, but that won’t last forever. Investors have a good chance to pick up this dividend payer at good value before the market recovers.
A bigger yield
Pembina Pipeline (TSX: PPL) is a good play if you want a larger upfront dividend yield. It is a major energy infrastructure provider in Western Canada. Around 85% of its cash flows are contracted, which largely supports its 5.6% dividend.
The company has been generating strong excess cash in the past few years, and it has a sector-leading balance sheet. That provides quite a bit of optionality for it to invest in growth projects in the coming years.
A stable dividend stock in any portfolio
Another great dividend stock for stable monthly income is Granite Real Estate Investment Trust (TSX: GRT.UN). This stock yields 4.5% and pays its distribution monthly.
Granite has an incredibly resilient portfolio of manufacturing, warehousing, and logistics industrial properties. It has long-term leases, high-quality tenants, and the opportunity to steadily grow rents in the coming years. It has an excellent balance sheet and a top management team.
For a low-risk, steady-growth stock with a record of dividend growth, Granite is a quality pick at an attractive valuation today.
A smaller bank stock set to get much larger
EQB (TSX: EQB) is known as Canada’s challenger bank because of its unique, digital-only platform. The company has been able to earn elevated margins and strong profit growth because of its low-cost operating model.
EQB has increased its profit per share by 16% compounded annually over a decade. Its dividend per share has risen annually by a 17.4% compounded rate. Right now, the stock yields only 2%.
With Canada’s population quickly growing, EQB has a great opportunity to keep capturing market share. If the bank can continue to execute, dividend growth and capital growth should continue to provide a great combination of total returns.
