In this current market environment, I’d argue that investors who are laser-focused on gaining exposure to companies with rock-solid balance sheets and strong earnings forecasts are likely to outperform. To a large extent, I’d argue that most dividend stocks are representative of companies that fit this mould.
That’s because companies that pay out dividends tend to require stable balance sheets and cash flow growth outlooks in order to maintain their distributions. With greater uncertainty facing investors than we’ve seen in some time, investing in dividend stocks can prove to be a winning strategy for those thinking long term.
Here are three of the best such dividend stocks Canada has to offer right now, in my view.
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Killam Apartment REIT
In the real estate investment trust (REIT) space, Killam Apartment REIT (TSX: KMP.UN) continues to be one of my top picks for investors looking for a nice combination of yield and capital appreciation over time.
The trust’s unique focus on key regional markets in Canada provides investors with upside if these regional markets see greater rent growth and lower occupancy rates over time. The pandemic boom certainly helped this REIT in particular, given Killam’s focus on the Maritimes and other areas of the country that other larger players may not be as active in.
But with return-to-work mandates and a shift back toward major cities, Killam’s share price performance hasn’t been as robust as others in this space.
That said, I still think interest rates are likely to decline, and the work-from-home trend will continue in the long term. For those who think the same way, picking up shares of Killam at levels near five-year lows seems like a smart move. Notably, investors gain an impressive dividend yield of 4.3% for doing so.
Rogers Communications
In the Canadian telecommunications sector, Rogers Communications (TSX: RCI.B) remains one of the best options for dividend investors to consider.
The company’s 3.7% dividend yield is about as robust as they come, supported by rock-solid cash flows via the company’s core telecom business. With other businesses surrounding sports and entertainment to round out the portfolio, this is a company that’s bigger and more diversified than many of its peers. That’s a model I like.
I think Rogers is well-positioned to continue growing its dividend over time. For those who like the stability the telecom sector provides, I think investors still have a green light to buy this stock, even after its recent surge over the past few months.
Cenovus Energy
One of the top Canadian energy stocks I don’t talk about enough is Cenovus Energy (TSX: CVE).
Shares of the Western Canadian oil and gas producer have been on an absolute tear over the past five years, surging from around $5 per share to the $25 level over this time frame.
Indeed, many of the top AI stocks in the market haven’t seen these kinds of returns. Thus, those who have stayed consistent in their approach and remained invested in energy giants like Cenovus have been rewarded.
Of course, commodity price volatility can continue, and this rally is one that could revert at some point. Indeed, if we see recessionary forces take hold, lower energy demand coupled with economic weakness could drive earnings weakness for companies like Cenovus.
That said, over the long term, I think most investors would agree that we’ll need more energy rather than less. For those looking for a top dividend stock in this space to consider, I think CVE stock and the 3.1% yield this stock provides are worth the squeeze right now.
