Top Picks: 3 Canadian Dividend Stocks for Stress-Free Passive Income

Do you want passive income? These three offer not just strong passive income now, but a large future opportunity for growth.

Amy Legate-Wolfe

Author Bio

Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Her work can also be found at Canada's National Observer, where she writes on the business side of climate action. Before joining Motley Fool Canada, Amy wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband.

Social Media

Follow Amy on LinkedIn and Canada Stock Digest.

Favorite Investment Quote

“October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published November 26, 2024 8:15 pm EST

Creating passive income through dividend stocks can be as stress-free as sipping your favourite coffee on a Sunday morning — that is, if you pick the right stocks. The beauty of this approach is that you let your money do the heavy lifting while you sit back and enjoy regular payouts. Today, let’s dive into three excellent choices for your portfolio.

woman looks out at horizon — Source: Getty Images

Chartwell

Chartwell Retirement Residences (TSX: CSH.UN), Canada’s leading senior housing provider, offers a solid option for steady dividends. The stock’s 3.89% forward yield may not set the world on fire, but it reflects a business built on the evergreen demand for senior living.

Over the past year, Chartwell’s revenue grew by 13.2%, hitting $782 million, demonstrating its resilience in a challenging market. With its ongoing investment in property development and an aging Canadian population, the future looks rosy. Sure, its payout ratio of 791.75% seems eye-popping. Yet that’s a quirk of real estate investment trust (REIT) accounting. Rest assured, it’s sustainable for now.

goeasy

Next up, goeasy (TSX: GSY). This alternative lender specializes in helping Canadians with less-than-perfect credit histories, and it’s been a dream come true for dividend investors. With a forward yield of 2.69%, GSY may not scream “passive income.” Yet, it compensates with jaw-dropping growth.

Over the past year, its revenue jumped by 5.1%, reaching nearly $804 million. At the same time, earnings soared by 28.1%. This stock combines the best of both worlds: a modest dividend-payout ratio of 27.26% and a track record of annual dividend increases. It’s like planting a tree that grows money every year.

CIBC

Canadian Imperial Bank of Commerce (TSX: CM) is the cornerstone of any stress-free dividend strategy. With a forward yield of 3.94%, this heavyweight bank is known for its stability and generosity. Its most recent quarter showed a 19.6% revenue increase year over year. Driven by robust retail banking and capital markets performance.

CIBC’s quarterly earnings growth hit a healthy 25.6%, and its payout ratio sits comfortably at 51.66%. With decades of steady dividend payments under its belt, it’s no wonder CIBC remains a favourite for income-focused investors.

Strength together

Why are these three stocks so appealing for a stress-free strategy? Diversification is key. Chartwell offers exposure to real estate and aging demographics, goeasy taps into the high-margin lending market, and CIBC provides a rock-solid foundation with its banking expertise. Together, these balance risk and reward beautifully.

Another bonus? These companies are Canadian. For investors leveraging a Tax-Free Savings Account (TFSA), dividends from Canadian corporations are tax-free, making the payouts even sweeter. Combine that with reinvesting those dividends, and you’ve got a compounding machine working tirelessly on your behalf.

Bottom line

Dividend investing doesn’t have to be complicated. Focus on quality stocks like Chartwell, goeasy, and CIBC stock — stocks that deliver a blend of stability, growth, and reliable payouts. Keep your strategy simple, reinvest your dividends, and let time work its magic. With this trio in your portfolio, you’ll be well on your way to enjoying passive income without breaking a sweat.