Which dividend stock may be best for me may not be the best pick for you. I’m fully aware of the divergence in risk appetite, investing time horizons, and overarching goals among individual investors.
Personal finance is just that – personal. The same thing goes for investing and picking stocks or index funds that suit a particular investor’s needs.
In this article, I’m going to do my best to highlight three of the best Canadian dividend stocks I think will fit the needs of most investors with a long investing time horizon and a mid-tier risk tolerance profile.
Source: Getty Images
Restaurant Brands
On the more defensive end of the spectrum, I think Restaurant Brands (TSX:QSR) is one of those quality blue-chip stocks that most investors can hold for decades and forget about.
Indeed, I think making investing boring is kind of the name of the game. Finding ways to generate double-digit total returns and hopefully beat the market – that’s a byproduct of picking the best companies out there.
As a top fast food giant with world-class banners catering to diners looking to trade down from other more expensive alternatives, I think Restaurant Brands’ growth prospects are about as good as they come in its core sector. And with a dividend yield of 3.4% to add to its strong long-term capital appreciation profile, this is a winner that’s worth buying no matter whether you call yourself a dividend, value, or growth investor.
Fortis
I continue to come back to Fortis (TSX:FTS) as a top dividend pick, and that’s mostly because I place so much emphasis on dividend growth compared to up-front yield, relative to most investors.
Indeed, Fortis’ upfront dividend yield of just 3.5% isn’t going to blow most investors away. Instead, it’s the company’s underlying rock-solid cash flow profile, driven by its regulated utilities business, that provides the kind of stability and dividend growth outlook I think so many investors are after.
For those seeking passive income that can not only grow over time, but also potentially keep up with the pace of inflation, Fortis would be my top pick as the way to achieve this goal. With a track record of more than 50 years of consecutive dividend increases, there’s a lot to like about this name right now.
Manulife Financial
In the financials sector, I think Manulife Financial (TSX:MFC) could get the least amount of love from investors of any stock in the market.
Why? Well, Manulife isn’t a large Canadian bank, insulated from competition via an oligopoly-like structure that’s been in place for roughly a century. This is an insurance company with a much more volatile business model, one that was hit particularly hard by the pandemic.
Now, I have to say, I did call Manulife a buy for the past five years, even when it was trading near rock bottom. Risks are always there for companies like Manulife that hold long-duration assets (to offset their long-duration liabilities).
But with interest rates coming down and strong growth coming from the company’s quickly growing Asian business, there’s a lot to like about its solid upside over the long term. With a dividend yield of 3.6% and plenty of long-term growth ahead, this is a top dividend stock I think investors shouldn’t sleep on right now.
