Dividend investing can be a powerful strategy for building wealth while reducing risk. By focusing on high-quality dividend-paying stocks, investors can create a reliable income stream that not only generates consistent cash flow but also has the potential for long-term capital appreciation. If you’re looking to boost your dividend income, here are two high-dividend TSX stocks to consider for growing payouts over time.
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Toronto-Dominion Bank
Toronto-Dominion Bank (TSX: TD) is a trusted name with a history dating back to 1855. As one of the largest banks in North America, TD ranks among the top 10 in terms of total assets and market capitalization. This well-established institution offers a broad range of services, from retail banking to wealth management, positioning it as a strong choice for dividend investors.
TD is especially appealing due to its long-standing commitment to rewarding shareholders with rising dividends. The bank’s quarterly dividend was last increased in December 2024, and its annualized payout currently stands at $4.20 per share, equating to a yield of 4.9% at a share price of $85.58. This consistent dividend growth makes TD an excellent choice for those seeking income and stability.
What makes TD even more attractive is its diversified revenue streams and long-term earnings potential. The bank has proven its ability to generate profits regardless of economic cycles, and it could continue to raise dividends by 6% or more per year in the future. At its current price, TD stock appears fairly valued, trading at a price-to-earnings (P/E) ratio that aligns with its historical average. For those looking for a reliable dividend stock with the potential for steady growth, TD is a solid pick.
Canadian Natural Resources
If you’re willing to take on more volatility for the potential of higher rewards, Canadian Natural Resources (TSX: CNQ) could be the stock for you. As one of Canada’s largest and most diversified oil and gas producers, CNQ is a dividend knight and has a remarkable track record of about 24 consecutive years of dividend increases. This makes it a top dividend-growth stock with a reputation for rewarding shareholders, even during times of economic uncertainty.
Despite facing challenges — such as recent tariffs imposed by the Trump administration — CNQ has continued to raise its dividend. Just this month, the company increased its quarterly dividend by 11.9% compared to a year ago. At a current share price of $40.74, CNQ offers a dividend yield of approximately 5.8%, making it a very attractive choice for income-focused investors.
Although CNQ has been facing some headwinds, analysts believe the stock is trading at a 25% discount to its intrinsic value, making it a potentially undervalued opportunity. For investors who are comfortable with the inherent volatility of the energy sector, CNQ offers not only a solid dividend but also the potential for significant capital appreciation when oil prices recover.
The bottom line: Building a strong dividend portfolio
Both Toronto-Dominion Bank and Canadian Natural Resources offer compelling dividend opportunities, but they cater to different risk tolerances. TD provides more stability, making it ideal for conservative investors. On the other hand, CNQ offers higher yield potential and dividend growth but comes with more volatility due to its exposure to the energy sector. By adding these stocks to your portfolio, you can position yourself for increasing payouts and income growth over time.
