When you buy a dividend stock for the long term after carefully analyzing its financials and future growth prospects, you shouldn’t worry about short-term market fluctuations. Instead, try to focus on the stability and growth potential of the dividends and the overall returns the stock can provide over time.
Although the TSX Composite benchmark has seen a strong rally in recent months due mainly to the Bank of Canada’s decision to cut interest rates, many fundamentally strong stocks still look undervalued. These declines give investors an opportunity to double their investment in stocks that not only offer attractive dividends but also have strong potential for capital appreciation. Let’s take a closer look at two such top Canadian dividend stocks you may want to consider doubling up on right now.
Nutrien stock
Nutrien (TSX: NTR) is a Saskatoon-based company with a market cap of $34.7 billion as its stock trades at $70.14 per share after sliding by 6% so far in 2024. The recent losses in its share prices, however, made its annualized dividend yield even more appealing, which now stands at approximately 4.2%.
If you don’t know it already, Nutrien primarily focuses on producing and distributing potash, nitrogen, and phosphate products essential for agricultural use. These nutrients are fundamental to the growth of crops and play an integral role in global food security. This secures Nutrien’s position in the market, which is a strong base for its stable dividend payments.
Despite lower net fertilizer selling prices impacting overall earnings in the first quarter of 2024, Nutrien saw increased retail earnings, higher fertilizer sales volumes, and reduced natural gas costs. High gross margins for crop nutrients and crop protection products helped the company’s retail segment profitability improve.
As potash demand in North America and Southeast Asia is expected to strengthen, I expect Nutrien’s financial growth trends to improve in the coming years. Also, the company’s continued focus on automation and efficiency improvements in production facilities brighten its long-term growth outlook, making it an attractive stock to double up on right now.
Superior Plus stock
Superior Plus (TSX: SPB) is another top Canadian dividend stock that has been on a downward trajectory in 2024, which could present a buying opportunity for dividend-focused investors. This Toronto-headquartered company mainly focuses on distributing propane, compressed natural gas (CNG), and other renewable energy products to customers.
After witnessing 17.5% value erosion year to date, SPB stock currently trades at $7.94 per share with a market cap of $2 billion. At this market price, it has an impressive 9.1% annualized dividend yield.
Despite the negative impact of challenging weather conditions on its business, Superior posted a record adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) of $235.6 million in the first quarter, reflecting a 15% year-over-year rise. Certarus, which acts as Superior’s (CNG) division after its recent acquisition, achieved strong growth, with the segment’s adjusted EBITDA reaching $51.5 million, up 9% from a year ago.
Some of the main factors that boost Superior Plus’s long-term growth outlook are its commitment to expanding its renewable energy portfolio and strategic focus on managing debt and leverage. These factors make it a great stock for investors seeking high dividend yields and the potential for significant capital appreciation as the market conditions improve.
