2 of the Top Dividend Stocks in Canada

Here are two of the best buy-and-hold-forever dividend stocks in Canada you can bet on.

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Whether you are a beginning investor or an experienced one, holding some quality dividend stocks in your portfolio could be a wise decision. By incorporating dividend stocks into your portfolio, you not only receive a steady income but also increase your chances of seeing capital appreciation in the long term. Many Canadian companies have a decades-long history of paying and increasing dividends, making them reliable choices for income-focused investors.

In this article, I’ll talk about two of the top dividend stocks in Canada that offer both stability and growth potential for long-term investors, irrespective of short-term market uncertainties.

Canadian Natural stock

Canadian Natural Resources (TSX:CNQ) is the first reliable, large-cap dividend stock in Canada you may want to add to your portfolio. This Calgary-based oil and gas producer has a market cap of $98.8 billion as its stock trades at $46.25 per share after surging by 27.5%.

Despite the recent increase in its share prices, CNQ stock still offers a decent 4.5% annualized dividend yield. This top dividend stock has been rewarding its investors with quarterly cash distribution for well over two decades. In the last five years, from 2018 to 2023 alone, Canadian Natural’s annual dividend payment per share has jumped by around 176%, thanks to its strong financial base and stable cash flows. To give you a quick idea about that, the company’s adjusted annual earnings inched up by 190%, with the help of a much lower 71% increase in its total revenue.

Canadian Natural continues to follow its policy of returning significant value to investors as it distributed $1.7 billion among shareholders in the first quarter of 2024 alone, including $1.1 billion in dividends and $600 million through share repurchases. Moreover, CNQ stock’s focus on low capital exposure projects and significant growth opportunities across its asset base makes it one of the best dividend stocks in Canada to buy now and hold forever.

Canadian Imperial Bank stock

Canadian Imperial Bank of Commerce (TSX:CM) could be another strong top dividend stock you can buy in Canada today and hold for decades to come. The Toronto-based bank currently has a market capitalization of $61.4 billion, making it the fifth-largest bank in Canada. After rallying by around 12% in the last year, CM stock currently trades at $65.15 per share.

Interestingly, Canadian Imperial Bank has been rewarding its investors with regular dividends for over one and a half centuries (since 1868). In its last five fiscal years, from 2018 to 2023 (ended in October 2023), the bank raised its dividend per share by nearly 29% from $2.66 to $3.44 per share. At the current market price, it has a 5.5% annualized dividend yield and distributes these payouts every quarter. Canadian Imperial Bank’s adjusted annual earnings have gone up by more than 10% in the last five fiscal years, while its total revenue has surged by roughly 31%, reflecting its strong underlying fundamentals.

Although higher provisions for credit losses have affected its earnings growth in recent quarters, easing monetary policy and improving economic scenario interest rates in Canada are likely to boost its profitability again going forward, brightening its earnings growth outlook. This positive factor, along with its strong balance sheet, could give it a solid base to continue raising its dividends in the future, making it an amazing dividend stock to buy and hold.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

The Motley Fool recommends Canadian Natural Resources. The Motley Fool has a disclosure policy. Fool contributor Jitendra Parashar has no position in any of the stocks mentioned.

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