If you’re sitting on $7,000 and want to put it to work in today’s uncertain market, dividend stocks can offer a powerful combination of income and long-term wealth creation. Here are two top Canadian names for potential capital deployment today — especially for investors who value strong cash flow, steady dividends, and the potential for double-digit total returns.
Let’s explore why splitting $7,000 evenly between these two blue-chip dividend growers could be a smart wealth-building move.
1. Canadian Natural Resources
Canadian Natural Resources (TSX:CNQ) is a long-time favourite among dividend investors — and for good reason. With a current dividend yield of 5.2%, CNQ offers one of the juiciest payouts on the TSX.
Some investors hesitate when it comes to energy stocks due to commodity price volatility. But CNQ has proven it can weather cycles exceptionally well. Since initiating its dividend in 2001, the company has increased it every single year — that’s over two decades of dividend growth.
Even more impressive is the 20-year dividend growth rate of 20.7%, showing a consistent commitment to returning capital to shareholders. And while its most recent quarterly increase was 4.4%, the trailing 12-month dividend growth sits around 12%, still firmly in double-digit territory.
Dividend growth aside, CNQ has also delivered on capital appreciation. Over the past decade, the stock has returned an average of 12% per year, with the total return (including dividends) reaching an impressive 17% annually. To put that into perspective, a $10,000 investment 10 years ago would be worth about $48,240 today.
Currently trading near $45 per share, CNQ looks reasonably valued. Analysts see roughly 16% upside from here, and its free cash flow payout ratio is a sustainable 58%. Moreover, the company has built up substantial retained earnings — enough to cover about six years’ worth of dividends if needed.
2. Canadian National Railway
Canadian National Railway (TSX:CNR) isn’t just another industrial stock — it’s a Canadian dividend aristocrat with a 29-year streak of dividend increases. While recent headwinds like labour disruptions, wildfires, and U.S. tariff shifts have weighed on the stock, these challenges appear to be temporary.
The result? An opportunity.
CNR is down about 22% from its 2024 high, trading at $134.78 per share at writing, and yielding 2.6%. That’s about 25% higher than its three-year average dividend yield, suggesting the stock may be undervalued. Historically, dividend yield spikes like this have often signalled buying opportunities in quality names.
While CNR’s most recent dividend hike was a modest 5%, its five-year dividend growth rate still stands at a solid 9.5% — a sign of long-term strength.
With a price-to-earnings (P/E) ratio of about 18.2, CNR trades at a 14% discount to its historical average valuation. If the company navigates its turnaround successfully, investors could see annual total returns of 12% or more over the next few years.
Investor takeaway: Passive income + long-term growth
By dividing a $7,000 investment between CNQ and CNR, investors can tap into two different sectors — energy and industrials — while benefiting from both high dividend income and the potential for capital gains.
These stocks aren’t just defensive plays; they’re long-term wealth builders. And in today’s market, that’s a rare combination worth owning.
