With the economy finally beginning to rebound, inflation cooling off significantly and now interest rates beginning to decline, there is a tonne of opportunity for investors to buy high-quality stocks. Some of the best stocks have already started to rally. However, many top stocks continue to trade undervalued, making now one of the best times for investors to buy high-quality dividend stocks.
Many companies are worth considering in this environment, but dividend stocks especially are some of the best to buy now for a few reasons.
Firstly, as interest rates continue to decline, high-quality dividend stocks will see some of the biggest gains, as stocks, especially dividend-payers, generally tend to move in the opposite direction of interest rates.
In addition, while the economy is improving, we aren’t out of the woods yet. So, many investors may want to use this opportunity to buy reliable, high-quality dividend stocks to help shore up their portfolios.
For whatever reason you’re looking to put your hard-earned money to work today, here are two of the smartest dividend stocks you can buy right now.
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One of the smartest dividend stocks to buy and hold for years
With uncertainty still high, yet interest rates now on the decline, there’s no question that one of the best dividend stocks to buy right now is Fortis (TSX:FTS), the massive $29 billion utility stock.
As an ultra-reliable utility company and the largest in Canada, Fortis is one of the best and most reliable dividend stocks you can buy to help shore up your portfolio in this environment.
Fortis is a high-quality and low-risk investment because the services it offers are essential, well-diversified, and regulated by governments. This ensures that Fortis’ revenue and earnings don’t fluctuate very much from quarter to quarter, making its future earnings and dividend growth highly predictable.
Therefore, Fortis isn’t just a reliable stock that can help protect your capital in times of economic turmoil. It’s also one of the best dividend growth stocks in Canada, with 51 straight years of consecutive dividend increases.
So, given the uncertainty in the market, but also the momentum that dividend stocks like Fortis have right now as interest rates decline, it’s easily one of the best companies to buy today.
Not only can you still lock in a yield above 4.1% today, but Fortis also expects to continue increasing its dividend between 4% to 6% annually through 2029.
So, if you’re looking to add some defence to your portfolio while increasing the passive income it generates, Fortis is certainly one of the smartest dividend stocks to buy right now.
A top Canadian stock with significant long-term growth potential
In addition to Fortis, another one of the best Canadian dividend stocks you can buy right now is Canadian Tire (TSX:CTC.A).
Canadian Tire is one of the best-known brands in Canada and a massive retailer with a market cap of more than $9 billion and locations all over the country.
Furthermore, as a retailer, the company ran into some severe headwinds over the last year as higher inflation and interest rates weighed heavily on consumer spending, leading to lower sales, lower income and ultimately a lower stock price.
Therefore, although Canadian Tire has begun to recover as the economic environment has improved, it continues to trade undervalued, making it one of the best dividend stocks to buy now.
What’s most appealing about Canadian Tire, though, is that it not only offers investors potential as it recovers and rallies back to fair value but also, as a high-quality long-term growth stock, it offers significant capital gains potential for years.
Furthermore, because it pays a compelling dividend, which has a yield of roughly 4.4% today, you can generate significant passive income while you own the stock and wait for it to appreciate.
Therefore, given Canadian Tire’s growth potential, its position as one of the best-known brands in Canada, the current discount it trades at and the appealing dividend yield it offers, there’s no doubt it’s one of the smartest Canadian dividend stocks you can buy right now.
