Investing in the Canadian stock market doesn’t necessarily require you to be a millionaire or have a lot of financial expertise. In fact, you can start with a small amount of money and grow your wealth over time by investing in companies that pay regular dividends to their shareholders. In simple terms, dividends are payments that some companies make to their shareholders out of their profits. As most dividend-paying companies have strong financial positions, they can reward their loyal investors with consistent and growing dividends.
If you have $1,000 to invest right now, here are two of the smartest Canadian dividend stocks to buy that offer growing dividends and solid growth potential.
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Canadian Imperial Bank stock
With a market cap of $66.9 billion, Canadian Imperial Bank of Commerce (TSX:CM) is currently the fourth-largest bank in the country. After witnessing a spectacular rally of around 46% over the last nine months, CM stock currently trades at $71 per share.
At this market price, it has a decent 5.1% annualized dividend yield. The bank distributes its dividend payouts every quarter and is known for its strong dividend payout history. In the 10 years between its fiscal year 2013 and 2023 (ended in October 2023), Canadian Imperial Bank’s dividend per share rose around 81%.
In the quarter ended April 2024, Canadian Imperial Bank’s total revenue rose 8.1% YoY (year over year) to $6.2 billion due mainly to the strong performance of its capital markets and Canadian personal and business banking segments. Even though its quarterly provisions for credit losses rose by $76 million from a year ago, its adjusted earnings grew positively by 2.9% YoY to $1.75 per share, exceeding Street analyst expectations.
As gradually declining interest rates in Canada could potentially increase lending and improve the overall financial market conditions, Canadian Imperial Bank is likely to benefit, which should drive its share prices higher. Considering that, it could be one of the smartest dividend stocks to buy now in Canada and hold for the long term.
BCE stock
Another top dividend stock that has caught my attention of late is BCE (TSX:BCE). In addition to being among Canada’s largest telecommunication companies, it’s also renowned for its strong dividend track record and the stability it offers as a utility-like company in the telecom sector. Interestingly, BCE has raised its dividends for 16 years in a row. Its dividend per share inched up by around 71% in the 10 years ended in 2023.
BCE has a market cap of $42.4 billion, and its stock trades at $46.48 per share, with nearly 11% year-to-date losses. At the current market price, it offers an impressive 8.7% annualized dividend yield.
While BCE is likely to announce its second-quarter earnings in the first week of August, its first-quarter financial results were largely optimistic. In the quarter ended in March 2024, the Canadian telecom giant’s wireless and residential internet revenue grew by 3% YoY. More importantly, its digital revenue growth stood strong at 33% YoY, which could continue in the coming quarters, driven by its digital initiatives and investments.
Besides BCE’s strong financial position, its continued investment in upgrading its wireless and wireline networks also boosts its long-term growth prospects, making it a top Canadian dividend stock to consider right now.
