We’re a little more than half way through what’s already been a volatile month for stocks. Many TSX dividend stocks have had a rocky month, with the macro environment continuing to provide investors with fits of uncertainty. Is a recession on the way? If so, which are the best and most defensive stocks to own right now?
I’d argue that blue-chip dividend stocks with solid balance sheets and strong cash flow profiles are the way to go. In that respect, there are a number of quality Canadian dividend stocks worth considering.
Here are three of my top picks in this regard right now.
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Manulife Financial
Insurance and wealth management giant Manulife Financial (TSX: MFC) is an excellent dividend stock for investors looking for a 3.7% yield and portfolio stability to consider.
The company has seen impressive results of late, driven by improving portfolio performance as bond yields have come down, regulating the company’s margin and cash flow profile via its earlier bets made in long duration assets. As the company has continued following its long-term business model in acquiring long-dated debt and other assets to offset its liabilities, this declining interest rate environment has been very helpful to its recent performance and overall outlook.
I think interest rates are more likely than not to continue coming down over time. This factor, in addition to Manulife’s rock-solid cash flow profile driven by its core insurance and wealth management businesses, makes for a winning combination in my view.
Restaurant Brands
With a dividend yield of around 3.5% and a rock-solid defensive business model investors are starting to appreciate, Restaurant Brands (TSX: QSR) is starting to feel the love from the market.
Shares of the Tim Horton’s parent, as well as a number of other world-class fast food chains, has seen strong performance in recent months, with the company’s share price flirting with breaching its all-time high level.
I think this is a stock investors need to have patience with. But for those with a truly long-term investing time horizon, picking up a juicy yield and waiting out this period of uncertainty in the markets seems like a good move. And with all the trade-down we’re seeing in so many areas of the economy, the company’s defensive position in the restaurant industry makes this a top stock I think is worth considering for the long-haul right now.
Cenovus
A riskier pick on my list of top dividend stocks for investors to consider right now is Canadian energy giant Cenovus (TSX: CVE).
This oil and gas producer has performed very well over the past five years, with most of its outperformance coming since the depressed pandemic era, where crude oil prices actually went negative for a short time.
Since then, investors have clearly reached for quality, with Cenovus being among the top Canadian energy stocks domestic and international investors have flocked to.
I think the dynamics in the energy sector are more likely than not going to be more stable in the years to come, thanks to the geopolitical backdrop we now find ourselves in. For those looking for a 3.2% dividend yield and exposure to the energy sector, this is a great way to go in my view.
