The Dividend Knights may not be as royal as the Dividend Kings, which have hiked their dividends by at least 25 consecutive years. That said, they do stand out as intriguing for Canadian investors who want a better combination of growth and dividend growth without having to screen out the names of firms that have not had the opportunity to raise their dividends by two-and-a-half straight decades! Not to disrespect the Dividend Kings, but there is a world of dividend-growth stocks out there that can offer solid total returns and growth over lengthy periods of time.
In this piece, we’ll check out two worthy names that could benefit as the Bank of Canada continues slashing interest rates, potentially at a faster rate than expected. Undoubtedly, the Canadian economy is holding up rather well, with inflation that’s come down by a landslide.
That said, don’t expect the Bank of Canada (or the U.S. Federal Reserve south of the border) to flinch when the big moment comes. As rates come down, a wide range of firms stand to benefit massively.
Whether we’re talking about the smaller-cap firms that have quite a bit of debt just sitting on the balance sheet or the rate- and cap-sensitive REITs (real estate investment trusts) and utilities, or the impact on the broader economy, lower rates are welcomed news by a wide range of firms.
In this piece, we’ll check in with two intriguing dividend stocks that I believe could be on the cusp of a magnificent bull run as we move past the second round of rate cuts from Canada’s central bank.
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TD Bank
TD Bank (TSX: TD) is stuck in a multi-year slump, but I wouldn’t give up on the $140 billion financial giant just yet. Not while it cleans up the mess from its previous money-laundering fiasco. Indeed, the money-laundering overhang has weighed down TD stock for most of the year now.
And with the stock seemingly stuck to the $80 level, I think investors seeking a solid dividend grower and longer-term performer have a lot to love from the name. Moving ahead, I’d look for TD to move on from a rather forgettable first three quarters of 2024. As the hunt for a successor to Chief Executive Officer Bharat Masrani moves forward, I find that TD stock can steadily ascend from here, even without so much as a blowout quarter.
Indeed, TD stock has been through a rough time, but the good news is a robust Canadian economy could help TD surpass some pretty lowered expectations. With a 5.05% dividend yield and a modest 18.6 times trailing price-to-earnings (P/E) multiple, I’d not be afraid to reach for the blue-chip this September.
Restaurant Brands International
Restaurant Brands International (TSX: QSR) is a fast-food powerhouse that’s looking increasingly undervalued as investors overreact to the so-called Ozempic (or GLP-1) headwind that could weigh considerably for some time. Additionally, Restaurant Brands seems to have done a better job than its peers of offering great deals amid inflation.
Indeed, we’ve been hit hard with inflation at seemingly all corners. And fast food has not been a place to seek shelter, at least until the latest race to win back customers via revamped value menus. With a stellar 3.42% dividend yield and a mere 17.27 times trailing P/E multiple, QSR stock looks like a Dividend Knight to pick up while it’s still in correction territory.
