Dividend stocks are known for boring businesses that only generate modest total returns after they pay their dividends. While this is true for some dividend stocks, it is a generalization that shrewd investors should look beyond.
Some of the best-performing stocks in Canada pay a modest, growing dividend. Even with the dividend, they can still re-invest capital to grow and compound their business. They are harder to find. However, if you are willing to sacrifice some yield for better total returns, there are some gems that could be highly rewarding in the Canadian market.
If you want dividend income but also want to beat the market, these cash-gushing dividend stocks could be interesting today.
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A top energy stock that gushes dividends
Canadian Natural Resources (TSX:CNQ) is one of Canada’s top cash cows. Certainly, as an energy producer, it is subject to commodity pricing. However, it has built its operations to withstand a variety of challenging environments.
It has an industry-leading low cost of production. The company has dialled in its production to factory efficiency. Consequently, even at low energy prices, it can generate strong free cash flows. Likewise, it has large businesses in both oil and gas. Gas prices have been more resilient in 2025, so that helps offset the volatility in oil prices.
Canadian Natural is built for the decades. It has energy reserves that could last for more than 50 years ahead. CNQ has a record of growing its annual dividend for the past 25 years (at a 20% rate, no less)! Today, it yields 5.4%, and its valuation is relatively attractive if you have a long investment horizon.
A top Canadian blue-chip stock
Another stock that gushes cash is Canadian Pacific Kansas City (TSX:CP). As opposed to CNQ, it has a miniscule dividend yield of 0.82%. While that isn’t large, the company is in a position to generate strong total returns in the coming years.
Since CP acquired Kansas City Southern at the end of 2021, it has consistently delivered some of the best results in the industry. A combination of synergies, operational improvements, and an expanded North America-wide network is creating substantial growth opportunities.
CP has quickly been reducing debt from its acquisition. Last quarter, it returned to a dividend-growth posture by increasing its dividend by 20%. It also announced a 4% share buyback.
All in all, the company is in a strong position to keep outperforming the industry. Further returns to shareholders are likely as it continues to execute and maximize cash generation.
A beaten-down transport stock for income, value, and future growth
A final dividend stock worth buying for market-beating returns is TFI International (TSX:TFII). This is a bit of a riskier play because the trucking environment has been abysmal in the past few years. TFI’s stock is down 36% this year.
However, that is also where the opportunity lies. TFI’s stock is beaten down. Any improvement in the economic environment will help push up TFI’s earnings. The company is a very lean operator. It is an expert at acquiring transport companies and turning them into cash machines. It could use the downturn to be opportunistic in its acquisition agenda.
The company has some work to do to clean up its U.S. operations. However, if it is successful, investors could see a nice uptick in earnings and cash generation.
If you don’t mind holding a stock with a bit of haze around it, now could be a great time to add TFI. It yields 2% today and has a record of annually increasing its dividend.
