When it comes to building long-term wealth, few strategies are as dependable as investing in high-quality Canadian dividend stocks.
Not only can dividend stocks offer a steady stream of passive income, but over time, reinvested dividends can significantly boost your total returns. That’s what makes them ideal for investors with a long time horizon, especially if you’re starting with a lump sum, such as $10,000, and want to watch it grow over the next decade.
One of the main factors that makes dividend investing so effective is the variety of strategies you can pursue.
Some companies are still in growth mode and pay a smaller dividend, but their share prices have more upside potential. Others are more mature and pay out most of their earnings as dividends, offering stable and predictable income.
And then there are the dividend growth stocks, companies with consistent operations that raise their payouts year after year. These are especially attractive for long-term investors because your yield on cost improves over time.
So, whether you’re looking for monthly income, long-term capital appreciation, or a mix of both, there’s a wide range of Canadian dividend stocks to help you build a reliable portfolio for the future. Here’s how you can start putting that $10,000 to work today.
Two higher-growth Canadian dividend stocks that can still generate passive income
If you’re looking to buy high-quality Canadian dividend stocks that can help boost your passive income, but also provide significant growth potential, two of the very best are goeasy (TSX:GSY) and Thomson Reuters (TSX:TRI).
Both Thomson Reuters and goeasy still have significant growth potential, and therefore, they pay out smaller dividends since they retain more cash to invest in their significant growth potential.
For example, goeasy offers a yield of just 3.5% and paid out just 35% of its normalized earnings per share last year. Meanwhile, Thomson Reuters offers a yield of just over 1.2%.
Despite their lower dividend yields, though, both stocks have earned investors significant gains and continue to have tonnes of growth potential going forward.
For example, in just the last five years, goeasy has earned investors a total return of 231%, while Thomson Reuters has earned investors a total return of 215%.
So, if you’re looking for top Canadian dividend stocks to buy now, these are undoubtedly two of the best.
Royalty stocks can be ideal investments for passive income seekers
If you’re an investor who’s looking to generate as much passive income as possible and isn’t as concerned with longer-term growth potential, a high-quality royalty stock like Pizza Pizza Royalty (TSX:PZA) could be an ideal option.
Pizza Pizza is a stock made for dividend investors. It has a super straightforward business model and very few expenses.
This allows Pizza Pizza to generate significant revenue from royalties on sales across the country, and then pay essentially all of its income after expenses and taxes back to investors.
Today, the Canadian dividend stock offers a yield of more than 6.2%, making it one of the best dividend stocks to buy now.
Two top dividend growth stocks to buy now
In addition to higher-growth stocks with lower dividends and stocks that pay out essentially all their earnings, you have dividend-growth stocks like Emera (TSX:EMA) that offer the best of both worlds.
Dividend growth stocks are ideal because, although they may not pay as much of a yield as a royalty stock like Pizza Pizza, over time, they offer more passive income potential due to the growing dividend.
Furthermore, as the company generates more cash flow to increase the dividend, the share price follows suit, giving investors growth from both the dividend and the capital gains.
Emera is a high-quality dividend growth stock because it’s a utility company with highly reliable operations and cash flow that’s constantly increasing.
And today, not only does it offer investors a yield of 4.7%, but it has also increased its dividend by more than 18% in just the last five years.
So, if you’re looking for high-quality Canadian dividend stocks to buy now, there’s no question a high-quality utility stock like Emera is one of the best to consider.
