Canada is full of quality dividend stocks to hold. Dividend stocks can be a nice buffer in your account during times of volatility. Even if your stocks fluctuate, you collect a tangible cash dividend return that can help balance your overall portfolio returns.
The recent tariff battle with our neighbours to the south (the United States) has created a significant amount of economic and political uncertainty. If there is one thing the stock market doesn’t like, it is uncertainty.
The S&P/TSX Composite Index is down 5% in the past month. The S&P 500 Index is down 9% in that time. There is likely more volatility to come (especially while Trump remains in office).
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Look for dividend stocks that produce an essential service
A safe place to look is for companies that provide essential services to consumers or businesses. Even if the economy takes a turn for the worse, people will still need to utilize these services.
Fortis
Fortis (TSX: FTS) is a great dividend stock to hold. It operates 10 electricity/gas transmission and distribution businesses across North America. People and businesses need heating/cooling/power regardless of what Trump does.
Fortis has been a stable beacon of safety for decades. The company has a 51-year track record of annual dividend growth. It is growing by about 6% per year. That should translate into a projected 4-6% annual dividend-growth rate moving forward.
This solid St. John’s-based company is a great bet if you are really worried about the economy in the next few years. It yields 3.8% today.
Pembina Pipeline
Pembina Pipeline (TSX: PPL) is another Canadian-made company to weather a storm with. This dividend stock operates a network of energy infrastructure assets across Canada.
In many instances, it is the only way energy producers can get their products to market. Consequently, its income is highly contracted, and its dividend is very safe. In fact, it maintained its dividend in 2020 even when energy prices dipped negative.
Pembina has a very strong balance sheet, and its businesses tend to generate strong cash flow. With Canada looking for new markets to sell its energy, Pembina could be a major player in building/managing that new infrastructure.
This Calgary-based company yields 5% right now. In the past few years, it has started to grow its dividend annually.
Choice Properties
Everyone needs groceries and basic essentials, even in a recession. One dividend stock that plays this theme is Choice Properties Real Estate Investment Trust (TSX: CHP.UN). With a market cap of $10 billion, it is one of Canada’s largest real estate investment trusts (REITs).
It owns a substantial number of the properties that are leased to Loblaw and other affiliated retailers. As one of Canada’s largest grocers, Loblaw sells to consumers at all levels of affordability. Loblaws is Choice’s anchor tenant. The REIT has +97% occupancy and long-term (+6 years on average) leases.
Loblaw recently announced plans to spend $10 billion expanding its footprint. That should provide meaningful opportunities for Choice to grow congruently. This Toronto-based company yields 5.5% today.
The bottom line on Canadian dividend stocks
If you are worried about the economy and the tariff crisis, find solid Canadian-built dividend stocks like the ones above. You won’t make big capital gains with these stocks, but they will provide safety and a nice stream of dividend income.
