Investing for passive income is a smart strategy when the stock market turns volatile. If you pick a stock in a good quality business, you are likely to earn dividend passive income regardless of what the market does.
For many Canadian investors, earning a steady (and preferably growing) stream of dividends can be very comforting. If you are wondering which stocks may provide a haven of passive income, here are four top Canadian dividend stocks to buy and hold through the market cycle.
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Pembina Pipeline: A resilient passive income stock
Pembina Pipeline (TSX: PPL) maintained its dividend during the COVID-19 pandemic (when oil prices dipped below zero). It is likely to maintain its steady passive income stream going forward.
Pembina operates a mix of collection and egress pipelines, natural gas processing facilities, and export terminals. Natural gas prices have been rising and that generally is favourable for Pembina. Likewise, investors have been flocking to its safe, largely contracted business model.
Pembina has one of the best balance sheets amongst its energy infrastructure peers. It is using that flexibility to construct a new LNG export terminal on the west coast (one of only a few in Canada).
With Canada looking for more trade partners, that facility is likely to be quickly utilized. Buy Pembina stock for its 5% dividend yield now and you might also get some growth in the future as well.
Tourmaline Oil: A stock for special dividends
Speaking about natural gas, Tourmaline Oil (TSX: TOU) has been gushing out attractive passive income to investors over the past few years. Tourmaline has grown to become the largest natural gas producer in Canada. It has made several smart acquisitions that have vastly expanded its reserve base and potential drilling acreage.
Tourmaline is a very well-managed company. It owns most of its own infrastructure. That allows it to closely control and minimize costs. It can generate strong free cash flows, even when natural gas prices are not elevated.
Tourmaline stocks yields 3.1% today. However, its total dividend is much larger (around 5%) when all is considered.
In its recent fourth quarter, it increased its base dividend by 43%. It also declared a special $0.35 per share dividend, which was an increase from the prior $0.25 per share dividends paid in prior 2024 quarters. It has paid special dividends to investors ever since.
First Capital REIT: A safe real estate stock for monthly passive income
First Capital Real Estate Investment Trust (TSX: FCR.UN) is a safe stock to own for passive income. It operates some of Canada’s best located urban-focused retail properties.
Most of its properties are anchored by grocery store tenants. It also caters to other essential service providers like pharmacies, banks, discount stores, and liquor stores. Strong demand has pushed occupancy over 97%. This has also allowed for good rental rate growth.
Not only is First Capital a great play for income, but it also has a value component. It owns substantial land and future development assets. As Canada’s population grows, these properties should only increase in value. Currently, they are hardly given any value in its stock price.
First Capital stock yields 5.2% right now. If you want monthly distributions, this is a great stock to add to now.
