The Smartest Dividend Stocks to Buy With $1,000 Right Now

TSX dividend stocks such as EQB and Hammond Power have grown their payouts at an enviable pace in the last decade.

| More on:
a man relaxes with his feet on a pile of books

Source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Historically, dividend growth stocks have outpaced the broader markets. Companies with a growing dividend payout generally benefit from a widening earnings base, which results in consistent dividend hikes and long-term capital gains.

In this article, I have identified two quality TSX dividend stocks you can buy with $1,000 right now.

Created with Highcharts 11.4.3EQB + Hammond Power Solutions PriceZoom1M3M6MYTD1Y5Y10YALL16 Oct 201415 Oct 2024Zoom ▾20152016201720182019202020212022202320240www.fool.ca

EQB stock

Valued at $4.1 billion by market cap, EQB (TSX:EQB) pays shareholders an annual dividend of $1.88 per share, translating to a forward yield of 1.8%. Moreover, these payouts have risen at an annual rate of 18.7% in the last decade, significantly enhancing the yield-at-cost.

EQB provides personal and commercial banking services in Canada. Its loan products include residential mortgages, equipment loans, home equity, commercial equity lines of credit, and business enterprise solutions, among others.

EQB has outpaced its larger banking peers by a considerable margin, generating dividend-adjusted gains of 339% since October 2014. Notably, the company continues to grow its book value between 13% and 15% each year, generating a similar return on equity on the invested capital.

With over $125 billion in assets under management, EQB is the seventh-largest bank in Canada. EQB’s customer base increased from 27,000 in 2016 to 485,000 in Q3 2024, while its customer deposits rose from $1.1 billion to $8.9 billion in this period.

In fiscal Q3 2024 (which ended in July), it reported revenue of $327 million and adjusted earnings per share of $2.96.

EQB completed the acquisition of ACM Advisors, an alternative asset management platform, last year, diversifying its revenue base. In the July quarter, its non-interest income accounted for 17% of total sales.

Despite its market-beating returns, EQB stock trades at a reasonable valuation. Analysts expect the company to expand adjusted earnings per share from $9.40 in fiscal 2023 to $12.40 in fiscal 2025. Priced at less than nine times forward earnings, EQB stock remains the top investment choice in October 2024.

Hammond Power Solutions stock

Valued at $1.7 billion by market cap, Hammond Power Solutions (TSX:HPS.A) designs, manufactures, and sells custom electrical engineered magnetics, cast resins, liquid-filled transformers, and other products. The company serves oil and gas, mining, steel, waste and water treatment, commercial construction, data centres, and wind power generation industries in Canada and other international markets.

Hammond Power pays shareholders an annual dividend of $1.10 per share, indicating a forward yield of 0.8%. However, these payouts have risen by more than 20% annually in the last five years.

Hammond Power opened a new factory in Mexico in Q2, allowing the company to report record all-time shipments for the sixth consecutive quarter. The increase in shipping volumes meant that several facilities were reporting close to or at capacity.

In the last 20 months, Hammond Power has focused on adding equipment to existing factories, allowing it to consistently increase shipping volumes. This increased capacity resulted in 14% year-over-year top-line growth in the June quarter.

Hammond Power is forecast to end 2025 with adjusted earnings of $7.13 per share, pricing the stock at 20 times forward earnings. Analysts remain bullish and expect the TSX stock to surge over 15% in the next 12 months.

Should you invest $1,000 in Canadian Natural Resources right now?

Before you buy stock in Canadian Natural Resources, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Canadian Natural Resources wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $20,697.16!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*.

See the Top Stocks * Returns as of 3/20/25

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Aditya Raghunath has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Hammond Power Solutions. The Motley Fool recommends EQB. The Motley Fool has a disclosure policy.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Dividend Stocks

A close up color image of a small green plant sprouting out of a pile of Canadian dollar coins "loonies."
Dividend Stocks

I’d Put $15,000 in These 3 Dividend-Growth Champions for Increasing Income Potential

Want to offset some volatility? Here are three defensive dividend-growth champions that can generate a juicy yield right now.

Read more »

Blocks conceptualizing Canada's Tax Free Savings Account
Dividend Stocks

Transform Your TFSA Into a Cash-Creating Machine With $7,000

Discover how the Tax-Free Savings Account can be your golden goose for generating cash without losing your investment.

Read more »

monthly desk calendar
Dividend Stocks

How I’d Invest $10,000 in Canadian Value Stocks for Monthly Dividend Income

A $10,000-diversified portfolio of value stocks focusing on dividend safety, yield, growth, and payment schedules can provide a reliable source…

Read more »

a person watches a downward arrow crash through the floor
Dividend Stocks

Is This Correction Your Chance? Top 4 Canadian Dividend Stocks on Sale

Stocks may be down, but now is your chance to get some of these top dividend stocks on sale.

Read more »

Confused person shrugging
Dividend Stocks

Where to Invest $2,500 in the TSX Today

These TSX stocks offer attractive dividends and a shot at decent upside on a rebound.

Read more »

Pile of Canadian dollar bills in various denominations
Dividend Stocks

Invest $25,000 in These Dividend Stocks for $1,956.66 in Annual Passive Income

Dividends stocks can make a huge difference, even if shares don't move an inch. And these might be the best.

Read more »

Pile of Canadian dollar bills in various denominations
Dividend Stocks

Got $5,000? 5 Income Stocks to Buy and Hold Forever

These income stocks have a solid dividend-payout history that can help you earn stress-free passive income.

Read more »

grow money, wealth build
Dividend Stocks

Why I’d Invest $10,000 in This Undervalued Dividend-Growth Stock for Decades of Income

This undervalued dividend stock offers a high yield of over 8% and can help you earn more than $200 in…

Read more »