5 "Forever" Dividend Stocks to Build Your Wealth

5 “Forever” Dividend Stocks to Build Your Wealth

If you’re looking for dividend stocks you can happily hold forever, consider these five. Some with more growth in returns than others.

Amy Legate-Wolfe

Author Bio Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Her work can also be found at Canada's National Observer, where she writes on the business side of climate action. Before joining Motley Fool Canada, Amy wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Social Media Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published April 25, 2024 10:30 am EDT

Canadian dividend investors tend to get blinders on when they want passive income. All they care about are dividends and more dividends, and that means finding a high yield. Right?

Unfortunately, if you want a dividend stock that’s going to last forever, you’ll need to look for more than just a high yield. So today, we’re going to look at five forever dividend stocks — ones that offer not just dividend income but returns as well as a strong payout ratio. That way, you can be sure these dividend stocks will keep paying up forever and a day.

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Granite REIT

If you’re looking for dividend income, then real estate investment trusts (REIT) are likely already on your list. However, there aren’t many that provide investors with forever income. Yet one that certainly does is Granite REIT (TSX: GRT.UN).

Granite REIT offers exposure to the highly in demand area of industrial properties. Whether it’s assembly lines or storage, the company continues to expand as demand continues. It offers a 4.74% dividend yield, with a payout ratio currently at 148%. That’s not ideal, but has been improving as share prices continue to rise. And with very little debt, it’s a growing dividend stock to consider.

CAPREIT

Another strong option among REITs is Canadian Apartment Properties REIT (TSX: CAR.UN). If you’re looking for more demand, then apartments are certainly in demand. CAPREIT has a diverse and growing apartment, townhouse, and multi-use properties worldwide.

The dividend stock currently has a 3.37% dividend yield and a 166% payout ratio — again, higher than we’d like. But as the share price improves, so too will the payout ratio. So, I would consider getting in while there is value.

Banks

Finally, there are the Canadian banks. These are strong investments for those seeking dividend income, as the Canadian banks are frankly so large. There really is just no competition for this oligopoly, which allows investors to look for safe income, both in terms of returns as well as dividend income.

When it comes to safe and growing dividend income, I would consider the top three by market cap: Royal Bank of Canada (TSX: RY), Toronto Dominion Bank (TSX: TD), and Canadian Imperial Bank of Commerce (TSX: CM).

RY stock currently has a dividend yield of 4.05% and a safe and steady payout ratio of 50%. Plus, shares are starting to rise near 52-week highs once more. TD stock, meanwhile, has a 5.07% dividend yield and another safe dividend-payout ratio of just 61%. Again, while more work needs to be done, the stock is edging towards 52-week highs.

CIBC stock might take a bit longer to reach those all-time highs due to its exposure to the housing market. However, it currently holds a strong dividend yield at 5.49%, with a payout ratio of 53%. What’s more, though, the stock has already passed 52-week highs, up 17% in the last year alone! So, it looks like you could gain some extra growth from this stock as the market recovers.