The TSX has been on a roll this year, and while growth has slowed somewhat, investors looking to reposition their portfolios toward a more defensive stance have plenty of options to choose from. Dividend stocks continue to be the focus for many investors, as companies that pay out dividends tend to have more stable cash flows and growth profiles over the long term. Personally, I like to look at companies that pay dividends for core portfolio holdings for this reason alone.
However, there are plenty of other factors to consider aside from dividends. Investors want to know a given company will grow over time and is valued fairly. Those factors mean many dividend-paying stocks may not be as attractive as they initially look.
That said, here are three of the top dividend stocks I’m focusing on in the market right now. These companies have the right mix of income, growth and value I think most long-term investors want to see.
Restaurant Brands
Restaurant Brands (TSX: QSR) is a global network of quick-service restaurants. The company registered system-wide sales of more than $35 billion for 2021 across 100 countries and 28,000 restaurants. It generates retail sales from company-owned restaurants, royalty fees and lease income from franchised stores. Notably, this company is the parent of world-class banners Burger King, Tim Hortons, Popeyes Louisiana Kitchen, and Firehouse Subs.
For investors looking for solid dividend-paying companies with the kind of earnings growth that justifies investing in such names, this is a top stock in my books. The company’s yield of 3.2% is relatively low, but it is supported by a strong history of dividend growth — one I think will continue for a long period of time.
As Restaurant Brands continues to grow globally (with plans to open 7,000 new restaurants over the next five years), I think there’s a solid growth profile as well to consider with this name. At just 18 times earnings, QSR stock certainly looks cheap at current levels. Long-term investors will want to continue adding to this name right now, at least in my view.
Fortis
Fortis (TSX: FTS) operates and owns 10 distribution assets and utility transmissions in Canada and the United States. The company serves approximately 3.4 million customers in this region and has smaller stakes in multiple Caribbean utilities and electricity generation. The company has a defensive appeal and offers quarterly dividends to investors, making it one of the most magnificent dividend stocks to invest in April 2024.
Fortis is among the most stable dividend stocks in the market, raising its distribution for 50 consecutive years. This factor makes the company’s 4.2% dividend yield much more attractive. And when considering the company’s very low beta of 0.17 (it doesn’t move in line with the market, in general), that’s the kind of defensive option investors who are worried about incoming macro uncertainty will want to consider.
Over the long term, I think Fortis remains a great core portfolio holding choice. This is a dividend stock I’d buy in May and hold forever.
Bank of Nova Scotia
Bank of Nova Scotia (TSX: BNS) is a Canadian banking giant offering financial services worldwide. The bank has five business segments: Canadian banking, global markets and banking, international banking, global wealth management and others. It offers a comprehensive range of products, services and advice involving commercial and personal banking, private banking, wealth management, and more.
The bank’s unique footprint in Central and Latin America showcases its growth globally and proves a unique contention for Canadian investors to consider. Over the past few years, investors who held this stock for the long term have earned consistent returns through the ups and downs of the market. Much of that has to do with Scotiabank’s 6.5% yield, which well outpaces bonds right now.
This company certainly provides cyclical exposure to the market, so I think it’s best held in a portfolio padded with other more defensive stocks (such as the last two picks). That said, for those looking to amplify their income over time, this is a top pick to consider.
