Top dividend-paying stocks are dependable investments to start a passive income stream. Meanwhile, some TSX stocks not only reward shareholders with reliable dividends but also offer the potential for capital appreciation. This combination of steady income with long-term growth makes them compelling investments to create wealth over time.
With that in mind, here are three Canadian stocks worth considering if you want both income and potential capital gains.
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Canadian Natural Resources
Canadian Natural Resources (TSX: CNQ) is a top TSX stock for investors looking for steady income and potential capital gains. This oil and gas producer has increased its dividend for 25 consecutive years. Moreover, its dividend has grown at a compound annual growth rate (CAGR) of 21% during that period. Its payouts are supported by its diversified mix of long-life, low-decline energy assets, which generate steady cash flows across all commodity cycles.
Beyond dividends, CNQ has also rewarded investors with remarkable capital appreciation. Over the past five years, the stock has compounded at an annual rate of 36.2%, resulting in a nearly 369% capital gain.
Looking forward, CNQ’s diversified production mix offers both stability and flexibility. At the same time, international exposure in the U.K. North Sea and Offshore Africa further strengthens its portfolio. Canadian Natural is also likely to benefit from low replacement costs and an extensive inventory of conventional projects that provide additional upside, enabling strong cash generation with modest capital requirements.
Moreover, with a vast, undeveloped land base supporting repeatable growth, CNQ is well-positioned to increase its dividends and deliver long-term capital gains.
Hydro One
Hydro One (TSX: H) is another top Canadian stock to buy right now for income and capital gains. It is a regulated pure-play transmission and distribution business with no exposure to power generation and commodity price volatility. This structure ensures resilient, low-risk earnings, supporting its higher dividend payments and share price.
This utility company has consistently raised dividends at a CAGR of 5% over the past eight years. Investors have also benefited from strong capital appreciation, as Hydro One’s shares have delivered a remarkable 110% return over the last five years, translating to a 16% CAGR.
Looking ahead, Hydro One’s expanding rate base, expected to grow at a CAGR of 6% through 2027, is set to drive earnings growth of 6–8% per year. That momentum should support management’s projection of annual dividend hikes of about 6%, making it a compelling income stock.
In addition, its strong balance sheet, predictable earnings, and exposure to structural tailwinds such as rising electricity demand resulting from population growth and data centre expansion provide a significant foundation for future growth.
Brookfield Asset Management
Brookfield Asset Management (TSX: BAM) is another TSX stock to consider for income and capital gains. Managing over US$1 trillion in assets, this alternative asset manager benefits from its fee-based revenue model and capital-light business. About 95% of its earnings stem from long-term or perpetual capital. This structure provides highly predictable cash flow, which in turn supports reliable distributions and drives its stock higher.
Since its listing in December 2022, shares of this large-cap company have grown at a CAGR of 26.6%, resulting in overall capital gains of 92.5%. The company is equally appealing for income investors, as it has a high payout ratio of around 90% of its distributable earnings. Moreover, earlier this year, it announced a 15% increase in its quarterly dividend to US$0.4375 per share.
Looking ahead, Brookfield is likely to benefit from its early investments in growth-heavy sectors. As global capital increasingly targets renewable infrastructure and data centres, Brookfield’s fee-bearing capital base should expand meaningfully. This will drive earnings, dividend growth, and share price appreciation.
