With interest rates declining, dividend stocks are rising. Dividend stocks have an inverse relationship to interest rates. As rates come down, safe investments like guaranteed investment certificates (GICs) and savings accounts become less attractive.
Consequently, investors are flocking to dividend stocks for their combination of income and capital returns. If you are looking for income and some growth, here are four dividend stocks that are screaming buys now.
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A top energy stock for dividend growth
Canadian Natural Resources (TSX: CNQ) stock popped after it announced the acquisition of Chevron’s Western Canadian oil sands assets. While the deal will halt CNQ’s current policy to pay 100% of free cash flow, it significantly expands its asset base, reserve life, and control over some high-quality oil sands assets.
After it announced the deal, CNQ also increased its dividend by 7%. That is its 25th consecutive dividend increase. The dividend has grown by a 21% compounded annual growth rate (CAGR) in that time!
While CNQ will now have some extra debt to eat down, it is a significantly better (and larger) company after this. This dividend stock already had an excellent operational and financial track record. Even though the stock is up, this quality company is still attractively valued. It yields 4.2% today.
A top real estate stock
Another dividend stock that is a bargain is BSR Real Estate Investment Trust (TSX:HOM.UN). This REIT operates a portfolio of garden-style apartments in Texas, Oklahoma, and Arkansas. This stock provides an attractive opportunity to invest in some of the top growth jurisdictions in the United States, but through a Canadian-listed stock.
2024 has been a bit of a stale year as new rental supply flooded its core markets. However, BSR is looking to resume its strong rental rate growth trajectory in 2025 and beyond.
In the meantime, the stock has been very cheap. Its portfolio trades at a large discount to its private market value. BSR has been buying back a lot of stock during this time. It also just increased its distribution. It yields 4% right now.
A top financial stock
goeasy (TSX: GSY) might be one of the best Canadian dividend stocks for income and growth. It has become one of the largest providers of non-prime lending products in Canada.
Canadian banks have tightened lending policies. This has pushed consumers towards goeasy. In its most recent quarter, loan originations rose 24%! Its loan portfolio increased 29%!
Expansions into auto lending, buy-now pay-later, and recreational product loans have all been major contributors to growth. It also has a credit card product that could unlock a whole new addressable market.
goeasy has increased its dividend for 10 consecutive years! GSY yields 2.6% and trades for a very fair 9.8 times forward earnings.
A software stock for dividends
Enghouse Systems (TSX: ENGH) is another under-the-radar dividend stock. It provides a mix of communication and asset management software around the world. Its software is not flashy or exciting. However, the software maker generates a lot of spare cash from its operations (around $30 million every quarter).
Right now, it is sitting with $240 million of net cash. Historically, the company has used this cash to grow by acquisitions. While its acquisition cadence has been slower than expected, management recently noted that share buybacks are becoming an attractive option to reward shareholders.
For a software stock, this company is cheap compared to peers based on its historic multiple. ENGH has increased its dividend by an 18% CAGR for the past 10 years. It yields 3.3% today.
