Every investor wants income, and dividend stocks certainly look tempting when they offer up huge yields. However, higher yields can sometimes come with low share prices. That’s why it’s far more important to dig in deeper and find the dividend stocks offering a change in life-long income. Which is why today, we’re going to consider investing options in Sun Life Financial (TSX:SLF), Whitecap Resources (TSX:WCP), and Doman Building Materials (TSX:DBM). So let’s get into it.
Source: Getty Images
SLF
SLF is one of those rare Canadian dividend stocks that genuinely looks built to pay investors forever. It combines deep roots, steady cash generation, and a business model designed to outlast recessions, inflation, and even shifting interest rate cycles. The dividend stock is a global insurance and asset management powerhouse. It earns money through insurance and wealth management, U.S. operations and Asia, as well as its asset management business.
The dividend stock has a long track record of steady passive income. The current dividend is at $3.12 per share annually, increasing the dividend 12 times since 2015! What’s more, that 4% dividend yield at writing is backed by a 60% payout ratio.
The latest quarter backs up even more future growth, with net income up 10% year over year, and earnings per share (EPS) increasing to $1.69 from $1.53 last year. The main growth drivers were rising net investment income, strength in asset management fees, and solid margins in Asian insurance sales. While SLF stock is not a rapid grower, it compounds steadily, making it a solid stock to hold in a long-term portfolio.
WCP
Then we have WCP stock, a dividend stock of a Western Canadian energy producer with core operations in Alberta, Saskatchewan, and British Columbia. It focuses on light and medium oil — a cleaner, higher-value product than heavy oil— and also produces natural gas and natural gas liquids. The dividend stock has built its portfolio through a mix of acquisitions and disciplined development. These deals gave it scale and diversification across some of Canada’s most productive basins, particularly the Montney and Duvernay formations.
Right now, WCP stock offers a monthly dividend of $0.732 each year, with a yield at about 7% at writing, supported by a stable 50% payout ratio. The dividend was suspended during the 2020 oil crash, but reinstated and since increased multiple times. In fact, the dividend has tripled since 2021!
As with SLF, earnings support future growth. Production during the second quarter hit 164,000 barrels of oil equivalent per day (boe/d), with $625 million in cash flow and $350 million in net income. Furthermore, it holds $1.6 billion in debt, with a $1 billion target by 2026. All together, it’s a conservative dividend stock poised for long-term future growth and income.
DBM
Finally, we have DBM, a Canadian small-cap dividend stock that quietly checks more boxes for long-term income investors than you might expect. It doesn’t have the global scale or financial moat, but its fundamentals give it real staying power. It’s now one of Canada’s largest distributors of lumber, building supplies, and construction materials. It also manufactures pressure-treated wood products and operates forest products facilities in Western Canada and the U.S. Pacific Northwest.
The dividend stock offers a $0.56 annual dividend, currently yielding 6.5% at writing and supported by a 66% payout ratio. As with others, the dividend was briefly suspended during the pandemic, but quickly reinstated. Now, payouts have increased steadily since 2021.
Earnings look solid with the company reporting revenue at $754 million, though down from the lower lumber pricing. Net income hit $26 million, and free cash flow remained positive at $33 million. Management reaffirmed its focus on debt reduction and dividend sustainability. Even with softer markets, its earnings and free cash flow continue to cover the payout comfortably.
Bottom line
When it comes to thinking long term, investors need to think essential. For these three dividend stocks, management has remained strong and conservative. That’s given these stocks power to fuel your portfolio for years, if not decades, to come.
