The world of dividend stocks is as diverse as it is massive. In terms of Canadian dividend stocks traded on the TSX, investors really do have a mixed bag: some companies are holding on to dear life in their ability to pay their yields (due to declining business fundamentals), while others have rock-solid balance sheets and the potential for very long-term dividend growth.
Of course, the latter group is what every investor will be after. But pinpointing which stocks fit within this bucket, and can continue to deliver huge profits for years and decades to come — that’s the harder part.
Let’s dive into two of the best dividend stocks on the TSX that investors may want to consider right now.
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Fortis
I know, I keep coming back to the well with Fortis (TSX: FTS). However, it’s my view that this Canadian utility giant could be one of the best dividend stocks on the market, so there’s good reason for my bullish take on the company.
My thesis on Fortis is relatively simple. This is a dividend-growth gem, with a track record of more than 50 years of dividend increases, and it is among the best Dividend Knights out there for investors to buy. Dividend growth, and the consistency and rate at which companies raise their distributions over time, can mean far more than current yield on a given stock.
That said, with a current dividend yield of around 3.5% and a robust business model based on regulated cash flows derived from electricity and natural gas utilities operations, Fortis does look like a solid long-term pick here.
For those bullish on the future demand for electricity driven by AI and other trends, Fortis remains my top dividend and total return pick as a way to play these trends. In other words, the massive growth Fortis has seen in its cash flow and earnings can continue for many years and decades to come, in my view.
BCE Inc.
Canadian telecommunications giant BCE Inc. (TSX: BCE), parent company of Bell and one of the best dividend stocks in the market, has not performed well of late.
Looking at the stock chart above, investors will note that this stock has declined from nearly $60 per share in 2022 to around $30 per share today. That’s a steep drop-off, and one that’s likely to give many investors a cue to head for the exits.
That said, this share price decline has resulted in a dividend yield that’s among the most robust in its sector. With a current yield of 5.4%, I’d argue that BCE stock is now nearing levels that really don’t make sense.
That’s because the company’s entrenched nature in the Canadian telecom market has allowed for outsized profits for a very long time. Historically, BCE’s management team has made a point of rewarding shareholders by returning capital at an impressive clip. Much like Fortis, this is a dividend-growth stock I don’t think should be overlooked in times like these.
In fact, this recent dip in BCE stock is one I think is worth buying. This is a cash flow machine being discounted by the market at a time when most investors should be looking for such defensive positioning. In the long term, both stocks should be winners.
