5 Top Dividend Stocks to Turn Your Savings Into a Steady Income Stream

Whether you want diversification or simple income streams, these five dividend stocks offer it not just now but for life!

Amy Legate-Wolfe

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. Before joining Motley Fool Canada, she 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. 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 June 27, 2024 9:15 pm EDT

| More on: CMGRT.UNMFCVXCZMI

Whether you’re looking for monthly income, global market access, real estate stability, banking strength, or insurance reliability, these picks have got you covered. By adding these to your portfolio, you’re not just investing in stocks. You’re investing in a steady, growing income stream that can support your financial goals. So, let’s get into the five best stocks to turn your savings into a steady income stream.

Pile of Canadian dollar bills in various denominations — Source: Getty Images

ZMI ETF

First, let’s start with a steady exchange-traded fund (ETF): BMO Monthly Income ETF (TSX:ZMI). The ZMI ETF is like the Swiss Army knife of your investment portfolio. This ETF is designed to provide monthly income, and it does so with a diverse mix of Canadian stocks and bonds.

Over the years, ZMI has demonstrated strong performance, consistently paying dividends. Historically, it’s provided a yield hovering around 4-5%. This is a sweet spot for those looking for a steady income without excessive risk. Right now, it sits just higher at 5.09%.

With its balanced approach, ZMI isn’t just a bet on one sector or one company; it spreads out the risk and ensures you get a piece of the action from multiple sources. As the economy grows and these underlying assets appreciate, your steady stream of income continues to flow.

VXC ETF

Next up is Vanguard FTSE Global All Cap ex Canada Index ETF (TSX:VXC). If ZMI is your Swiss Army knife, VXC is like having an all-access pass to the world’s best financial markets. This ETF provides exposure to over 10,000 stocks from developed and emerging markets, excluding Canada.

By investing in VXC, you’re tapping into global economic growth. Historically, VXC has delivered solid returns, supported by dividends from international giants. Its yield might be slightly lower than ZMI at 1.53%, but the growth potential is immense. As global markets expand and companies continue to pay dividends, VXC investors can enjoy a growing income stream from diverse sources around the globe.

Granite REIT

Now, to throw a real estate investment trust (REIT) in the mix. Granite Real Estate Investment Trust (TSX:GRT.UN) is a crown jewel of the real estate sector. Specializing in industrial and logistics properties, Granite has a rock-solid portfolio that generates consistent rental income.

Over the years, Granite has shown impressive growth, expanding its portfolio and increasing its funds from operations (FFO). This growth translates into higher dividends for shareholders. Currently, GRT.UN offers a dividend yield of around 4.96%, which is both attractive and sustainable. With the increasing demand for industrial spaces driven by e-commerce and global trade, Granite’s future looks bright, ensuring that your investment continues to yield steady income.

CIBC

Canadian Imperial Bank of Commerce (TSX:CM) is a heavyweight in the Canadian banking sector. With a rich history and a reputation for stability, CM is a reliable income generator. Historically, CM has offered a robust dividend yield, often exceeding 5% and currently at 5.46%. The bank’s earnings growth has been steady, driven by strong performance in personal and commercial banking, wealth management, and capital markets.

Even in turbulent economic times, CM has managed to maintain and even grow its dividend payouts. Looking ahead, as the economy recovers and interest rates stabilize, CM’s strong fundamentals and prudent management will continue to support its dividend payments, making it a cornerstone of any income-focused portfolio.

Manulife

Finally, Manulife Financial (TSX:MFC) is a global giant in the insurance and financial services industry. Manulife’s business model generates steady cash flow, which is crucial for sustaining its dividend payments. Historically, MFC has provided a dividend yield in the range of 4-5% and at 4.51% as of writing, supported by consistent earnings growth.

The company’s diverse operations across Asia, Canada, and the United States offer a cushion against regional economic fluctuations. As the global population ages and the demand for insurance and retirement products rises, Manulife is well-positioned to capitalize on these trends. This future growth potential means more earnings and, consequently, more dividends for shareholders.

So, from diversified ETFs that give you global exposure and balance to individual stocks that dominate their sectors, these investments combine historical performance with future growth potential.