Passive income is one of the most powerful financial tools available to investors. It allows you to earn money with minimal effort, often through smart, upfront investments. One of the most reliable sources of passive income is dividend-paying stocks – especially those from established companies with strong track records of paying and growing their dividends.
If I had $7,000 to invest today, I’d spread it across three top Canadian dividend stocks that not only offer high yields but also strong potential for long-term income growth. Here’s why these picks stand out.
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1. Bank of Nova Scotia: A turnaround story with a 6.1% yield
Bank of Nova Scotia (TSX: BNS) is currently trading at a discount of over 10%, making it a potential buy for dividend investors. The stock is down about 14% from its 52-week high and offers a hefty dividend yield of 6.1% at a share price of $69.07.
Under the leadership of CEO Scott Thomson since February 2023, the bank has begun exiting underperforming Latin American markets to refocus on more stable and profitable geographies – namely Canada, Mexico, and the Caribbean. This strategic pivot has come at a short-term cost, including a $1.4 billion charge related to asset sales. However, the long-term payoff could be significant.
According to Yahoo Finance, analysts have a consensus price target of $77.21 for the stock, representing near-term upside of nearly 12%. Investors can benefit from both capital appreciation and steady income while the turnaround strategy plays out.
2. TELUS: A telecom giant with a 7.6% yield
TELUS (TSX: T) is another reasonably valued dividend idea for passive income. Like other big Canadian telecoms, TELUS has faced stiff headwinds – falling average revenue per user, intense competition, and tightening regulations. However, the company is adapting, focusing on cost efficiency and margin expansion rather than subscriber growth alone.
The stock has declined roughly 27% from its 2022 highs and now trades at $21.09 – around the midpoint of a stable trading range between $19.50 and $22.50 since late 2023. At today’s price, TELUS offers a generous dividend yield of 7.6%.
Previously, the company committed to annual dividend hikes of 7% to 10% through 2025. While investors should keep an eye out for future updates to the policy, the current yield alone makes TELUS a compelling pick for income seekers –especially as the company stabilizes and potentially rebounds.
3. Capital Power: Reliable income from clean energy
Capital Power (TSX: CPX) offers a slightly lower yield at 4.9%, but what it lacks in headline income, it makes up for in dividend growth and long-term relevance. The Edmonton-based utility operates 30 power generation facilities across North America, totalling around 10,000 MW in capacity. Its diversified portfolio includes natural gas, renewables, and emerging battery storage technology.
Capital Power has increased its quarterly dividend at a compound annual growth rate of 6.8% over the last decade – a testament to its financial discipline and growth potential. With a focus on sustainable energy and a reliable track record of rewarding shareholders, CPX is well-positioned to be a long-term dividend grower.
Currently trading at $53.21, analysts believe the stock is undervalued by more than 17%, offering not only stable income but capital appreciation potential as well.
The Foolish investor takeaway
These three Canadian dividend stocks – Bank of Nova Scotia, TELUS, and Capital Power – provide a balanced blend of high yield, growth potential, and resilience. With a $7,000 investment split among them, you could establish a diversified passive income stream while positioning yourself for long-term financial gain.
