If you’re a fan of low-cost dividend growers, there’s a lot to love about the Canadian stock market. Even if you don’t need as much passive income today, betting big on some of the faster dividend-growth stocks could set you up nicely by the time you’re ready to retire and live off of passive income produced by your portfolio. Indeed, think of it like planting a few seeds in the soil today so that your future self can enjoy the fruit to be had from an apple tree that’ll stand tall a decade or more down the road.
Of course, you should allow the seeds ample time to grow. And, if you’re able, it can always help to keep adding to a position over the years, either by reinvesting the dividends you’ll receive or buying another big chunk of shares on weakness. In this piece, we’ll check in on two income boosters that have promising dividend growth rates and attractive valuation metrics.
Though they could take a hit come the next inevitable market downturn, I think long-term investors with the risk tolerance should consider checking out the following names as their dividends are both well-covered and growthy enough to continue moving higher even when the markets fall into a funk.
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Canadian Tire
Canadian Tire (TSX: CTC.A) is a fantastic Canadian retailer that boasts a very handsome 4.7% dividend yield after pulling back more than 6% off its 52-week highs. I view the dip as an opportunity for investors to put new money to work before the retailer is able to put together another few solid quarters come 2025. Indeed, we don’t know how Canada’s economy will fare next year.
As lower interest rates kick in, things may very well work out for the consumer discretionaries again. For now, the consumer may be challenged, but now doesn’t seem like a time to give up on a comeback, especially as Canadian Tire moves forward with its profit recovery.
The company’s making big improvements on the front of operating margins, a trend I expect will continue into 2025. In my view, at 13.1 times trailing price to earnings (P/E), you’re getting a pretty solid value proposition.
National Bank of Canada
National Bank of Canada (TSX: NA) is a seriously impressive performer in Canada’s Big Six. The bank is moving on up, even as some of its peers continue to tread water. As the bank continues making bold moves, there are reasons to stick with the $46.6 billion underdog that’s proving it’s one of the better-run financial institutions out there.
Recently, the bank found itself on the receiving end of a big Jefferies upgrade. They’re a big fan of the prior Canadian Western Bank acquisition and the “significant benefits” it’ll entail. I couldn’t agree more. National Bank made a wise move that could help it hit the gas in the new year as it attempts to power forward to become a more prominent challenger to its peers.
With a 3.25% dividend yield and a mere 13.35 times trailing P/E, NA stock still strikes me as a great value option, even with shares recently making new all-time highs just north of $137 per share.
