Investors seeking additional income streams to supplement their regular income often turn to dividend stocks. Price appreciation is more important to growth investors, so they focus on high-growth sectors, such as technology. However, you can combine the two investing strategies and have the best of both worlds.
If you’re investing for both dividends and appreciation, focus on high-quality stocks. This approach can generate greater profits and significantly higher returns over a longer investment period. Canadian Natural Resources Limited (TSX:CNQ) and Bank of Nova Scotia (TSX:BNS) are ideally suited for this strategy.
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Stable foundation
Canadian Natural Resources is a major player in Canada’s oil and gas sector. The $89.9 billion senior crude oil and natural gas producer has an impressive dividend growth streak. Its most recent dividend hike announcement marked 25 consecutive years of dividend increases.
Energy is a heavyweight sector but often faces tough market conditions. Still, CNQ’s dividend growth streak shows financial strength and a robust business model. Its President, Scott Stauth, said the ability to effectively allocate capital across the long-life, low-decline asset base is CNQ’s competitive advantage.
In the first half of 2025, net earnings increased 92% year-over-year to $4.9 billion. According to Victor Darel, Chief Financial Officer of CNQ, the company’s liquidity position, approximately $4.8 billion as of mid-year, provides significant flexibility. He expects the strong operations to drive material free cash flow generation and strong returns on capital.
CNQ is a rock-solid investment due to its stable foundation for growth. The dividend yield and increases should be sustainable. In Q2 2025 alone, dividend payments totalled about $1.2 billion. If net debt falls from $17 billion to $15 billion or $12 billion, 60% and 75% of free cash flow, respectively, will go to shareholders.
In the last five years, CNQ’s overall return is 373.2%-plus, with a compound annual growth rate (CAGR) of 36.4%. The stock trades at $43.21 per share and pays a 5.4% dividend. Market analysts have a 12-month average price target of $52.14, suggesting a possible 20.7% upside.
Assuming you invest $10,000 today, your money will compound to $29,466.50 in 20 years through dividend reinvesting, excluding price appreciation. If the share price and yield are constant, your potential quarterly income after 2045 is $400.74.
Generous Big Bank
No investor can outlive the more than 100-year dividend track record of Canada’s Big Five banks. BNS, the country’s fourth-largest lender, pays the highest dividend among this elite group. Moreover, this $101.9 billion bank has been paying dividends since 1832, the second-longest payment history after the Bank of Montreal.
In Q3 fiscal 2025 (three months ending July 31, 2025), total revenue and net income rose 13.4% and 32.2% year-over-year to $9.5 billion and $2.5 billion, respectively. According to Scott Thomson, President and CEO of BNS, the improving revenue growth resulted in another quarter of positive operating leverage.
At $87.74 per share, current investors enjoy an 18.8%-plus year-to-date gain and partake in the 5% dividend. The payout should be sustainable, given the low payout ratio of 46.1%.
Gold standard
Canadian Natural Resources and BNS are gold standards for investors seeking dividends and appreciation. Both are not only blue-chip stocks but also among the best on the TSX.
