When it comes to investing for the long haul, there’s no question that some of the smartest investments you can buy and hold in your portfolio are high-quality dividend stocks.
A high-quality dividend stock will generate steady cash flow, offer the potential for capital gains, and provide a level of stability that can help smooth out market volatility.
And the best part about investing in the stock market for the long haul is that you don’t need a massive amount of money to get started. Even a few hundred dollars can be enough to begin building a reliable income stream that grows over time.
That’s why saving and investing your money as early as possible is the best strategy. It gives your capital the longest amount of time to compound. And high-quality dividend stocks don’t just pay you today, they position you to earn more in the future, especially when they can consistently increase their dividends over time.
Another advantage is the discipline dividend investing naturally creates. When you focus on owning businesses that return cash to shareholders year after year, you’re less tempted to chase speculative stocks or time the market. Instead, you build a portfolio around solid companies that generate real earnings and reward you for holding them through every market cycle.
So, if you’re looking for some of the best dividend stocks to buy now, here are two of the best picks on the TSX.
Two of the best dividend stocks to buy on the TSX
The real estate sector is an excellent place for investors to find high-quality dividend stocks to buy and hold for years. And the best part about investing in REITs on the stock market is that you can gain exposure to Canadian real estate without needing a tonne of capital.
So, even if you have just $200 to buy right now, investors can gain exposure to a nationwide portfolio of apartment buildings with Canadian Apartment Properties REIT (TSX:CAR.UN), or an ultra-reliable retail portfolio with CT REIT (TSX:CRT.UN).
Canadian Apartment Properties REIT (CAPREIT) is one of the smartest dividend stocks to buy now because it’s the largest REIT in one of the most defensive industries in the economy, residential real estate.
It’s an incredibly reliable long-term business, and while it offers a lower dividend yield than other stocks on the market, over the long haul, it offers considerable growth potential.
Another reason it’s one of the smartest dividend stocks to buy now is that it’s trading cheaply. Not only is it trading at the bottom of its 52-week range, but it’s also trading at a forward price-to-funds-from-operations (P/FFO) ratio of just 14.6 times, below its five-year average of 19.6 times. Furthermore, its current dividend yield of 4.1% is considerably higher than its five-year average of 3.1%.
Meanwhile, although CAPREIT is the largest residential REIT, CT REIT might be one of the most reliable.
Despite being a retail REIT, CT REIT is extremely safe due to its relationship with Canadian Tire, both its majority owner and largest tenant accounting for roughly 90% of its revenue.
This relationship with Canadian Tire ensures stable and predictable cash flow for CT REIT as long as Canadian Tire continues to thrive and grow as one of the best-known retailers in Canada.
And with CT REIT now on the market for more than a decade, and considering it has grown its revenue, funds from operations, and dividend every single year since going public, it’s clear it’s not just a smart pick for its compelling 5.8% yield. It’s actually one of the best dividend growth stocks on the TSX.
