The Canadian stock market has witnessed a strong rally in the last couple of years as investors continue to bet on growth stocks amid easing inflationary pressures and declining interest rates. As a result, the TSX Composite benchmark has seen 26.4% gains in the last year.
However, the ongoing geopolitical tensions, volatile commodity prices, and expected changes in the U.S. trade policy after President-elect Donald Trump takes office could introduce new Uncertainties for global markets. This is one of the key reasons why long-term investors should always try to balance their portfolios with income-generating assets.
In this article, I’ll highlight two top Canadian dividend stocks that can help you turn your savings into a passive-income machine and secure your portfolio from any potential market downturn.
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Power Corporation of Canada stock
Trading with strong 24% year-to-date gains, Power Corporation of Canada (TSX: POW) is the first dividend stock you can add to your portfolio right now to generate passive income. It currently trades at $46.94 per share with a market cap of $27.9 billion. At the current market price, POW stock has a 4.8% annualized dividend yield and distributes these payouts every quarter.
The Montréal-based diversified holding firm has interests in several sectors, including financial services, renewable energy, and investments. If you don’t know it already, Power Corporation owns big stakes in TSX-listed companies like Great-West Lifeco and IGM Financial.
Power Corporation’s solid financials and growth fundamentals continue to prove its value as a top stock for dividend investors. With its net profit from continuing operations reaching $371 million in the third quarter and an adjusted net profit figure of $542 million, the company clearly showed its ability to deliver steady returns despite market fluctuations. Notably, IGM’s assets under management hit a record $264.9 billion at the end of the last quarter, reflecting an outstanding 16.5% YoY (year-over-year) growth.
Moreover, Power Corporation’s growth initiatives, including scaling alternative asset platforms and capital recycling, could improve its financial growth further in the coming years, which should also help the prices of this top dividend stock appreciate.
Atco stock
Though much smaller than Power Corporation by market capitalization, the second top dividend stock you can consider right now is Atco (TSX: ACO.X). After rallying by 26.3% so far in 2024, its stock currently trades at $40.84 per share with a market cap of $5.5 billion. It also rewards investors with quarterly dividends and offers an annualized dividend yield of 4% at this market price.
Being a diversified global Corporation, Atco operates across multiple sectors, including utilities, energy, logistics, and infrastructure, which provides it with stable and diversified revenue streams.
In the quarter ended in September, the Calgary-based firm’s revenue rose 5.5% YoY to $1.1 billion, driven by strong performance across its regulated utilities and infrastructure segments. Atco’s adjusted net profit for the quarter came in at $91 million, up 12.4% YoY and exceeding analysts’ expectations of $77.7 million.
Besides its strong developmental pipeline, Atco’s increased focus on advancing its hydrogen and clean energy projects makes its stock look really attractive to buy now and hold for the long term.
