Many new investors began their journey in the stock market during the global pandemic phase. Back then, the market was at a low point and many stocks were offering attractive dividend yields. Since then, however, the market has rebounded sharply, currently trading close to its all-time highs, making some dividends less appealing. This is one of the key reasons why new investors who are looking for passive income from Canadian dividend stocks need to be more careful now about which stocks they choose. Rather than focusing solely on dividend yields, they need to prioritize the quality, reliability, and growth of the dividend payments.
In this article, I will highlight two of my top TSX dividend stock picks for new investors who want to build a passive-income stream that could last for years.
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Great-West Lifeco stock
Great-West Lifeco (TSX: GWO) is the first dividend stock pick on my list for new investors. This Winnipeg-headquartered financial company primarily focuses on providing life insurance, health insurance, and asset management services to customers across Canada, the United States, and Europe. It currently has a market cap of $37.2 billion as its stock trades at $39.45 per share with nearly 9% year-to-date losses after rallying by more than 40% last year. At this market price, this top dividend stock offers a 5.6% annualized dividend yield and distributes these payouts on a quarterly basis.
In the first quarter of 2024, Great-West Lifeco reported record adjusted earnings of $1.01 billion, a 25.3% YoY (year-over-year) increase. This solid increase was driven by growth across all its key segments, higher equity markets, and positive contributions from its recent acquisitions. The company’s U.S. subsidiary, Empower, had more than $1.6 trillion as its assets under administration at the end of the quarter, reflecting strong growth in both defined contribution plans and personal wealth units.
Its strong financial growth trends helped Great-West Lifeco raise its dividends per share by around 36% in the five years between 2018 and 2023. As it continues to focus on strategic acquisitions and integrations, its long-term growth outlook remains strong, which should support the company to continue rewarding its investors with increasing dividends.
ATCO stock
ATCO (TSX: ACO.X) is another top dividend stock on the Toronto Stock Exchange new investors can consider buying now. This Canadian firm has a well-diversified portfolio of businesses, including utilities, energy, structures and logistics, and transportation, making it one of the most resilient companies in Canada. It currently has a market cap of $4.5 billion as its stock trades at $39.62 per share after rising by more than 8% in the last two months. ATCO stock has a 4.9% annualized dividend yield at the current market price and raised its dividend per share by roughly 26% in five years between 2018 and 2023.
The Calgary-headquartered company’s adjusted earnings in the first quarter of 2024 inched up by 9.1% YoY to $1.32 per share, exceeding Bay Street’s expectations despite a minor decline in its revenues.
Moreover, ATCO’s continued investments in regulated utilities and infrastructure projects, coupled with successful contract awards, brightens its long-term growth outlook, making it a reliable dividend stock to buy today.
