How I’d Invest $250,000 in Canadian Dividend Stocks

Can you think of what you would do if you had $250,000 to invest in the Canadian stock market, specifically in Canadian dividend stocks? A quarter of a million is not a small amount of cash. For many, it can be a life-changing sum of money in and of itself. Savvier investors would be wise to use such a lump sum to set their self-directed portfolios up for substantial long-term success.

The key would be to get the right balance between income and stability. Injecting some growth potential into your portfolio can add the right amount of risk that the stable investments can offset. There are plenty of high-quality Canadian dividend stocks to choose from, but I have my eyes set on three blue-chip Canadian stocks that might demonstrate the perfect examples.

Royal Bank of Canada

Royal Bank of Canada (TSX: RY) is the largest Canadian stock, boasting a $285.4 billion market capitalization as of this writing. It is a diversified financial services company that offers personal and commercial banking, insurance, corporate banking, capital markets services, and wealth-management services.

RY stock trades for $203.14 per share and boasts a 3% dividend yield. While it might not offer much in terms of dividends compared to the other two, RY stock makes up for it with its track record. The bank has been paying investors their dividends for over a century and a half.

While economic ups and downs have paused dividend hikes over the years, RBC has consistently paid its investors due to its immense financial strength. It is a mainstay in many dividend-focused portfolios.

Enbridge

Enbridge Inc. (TSX: ENB) is another staple in many investor portfolios due to the balance between growth and income it offers. Enbridge is a $149.1 billion market-cap diversified energy company. It owns an extensive network of midstream assets that transports hydrocarbons across North America. The company also has one of the region’s largest regulated natural gas utility businesses and the largest natural gas distribution company under its belt.

Enbridge is also building a portfolio of renewable energy assets to prepare the energy industry for a greener future. Its traditional energy operations meet the high demand for more immediate returns, while its natural gas segments offer stability in cash flows. The renewable segment offers significant long-term growth potential as the industry grows.

As of this writing, ENB stock trades for $68.36 per share and boasts a 5.5% dividend yield.

Canadian National Railway

Canadian National Railway Co. (TSX: CNR) is one of the two largest railway companies in Canada. CNR has a railway network spanning coast to coast in Canada, extending through Chicago to the Gulf of Mexico. The $80.3 billion market-cap railway company offers dividends at a meagre 2.8% dividend yield. While it might not seem like significant returns, the stock offers investors exposure to a necessary sector of the economy that virtually guarantees solid long-term returns.

Railways are a defensive business with a high barrier to entry, essentially solidifying CNR’s place as a dominating presence in the sector. These companies are essential to the regional economy in that they move goods across the continent for every industry. As of this writing, CNR stock trades for $128.66 per share.

Foolish takeaway

Here’s how a hypothetical $250,000 might look across these three TSX dividend stocks:

All told, a portfolio like this could return over $9,400 per year in dividends alone. That said, this is purely a way to demonstrate the concept of creating a self-directed dividend-focused portfolio with a substantial amount.

Since stock market investing is risky, you should never put all your eggs in such a tiny basket. It is a good idea to diversify across several stocks, and you should even consider adding short-term Guaranteed Investment Certificates into the mix for added stability.