Yes, I’m well aware that growth investors have had their day in the sun (or years), with growth stocks outperforming dividend stocks for essentially 15 years straight. That’s been true in most developed markets in the world, and it is a trend many expect to continue.
There are good reasons for this. Our economy globally has become much more technologically dependent. And given rising inflation and the concerns many investors have around their savings not keeping up with ever-increasing costs of healthcare, food and housing, this is a reasonable perspective to take.
That said, I’d also argue that many top dividend stocks have much more solid balance sheets and can position a portfolio much more defensively during periods of turmoil. For those who are more bearish or cautious right now, here are two top Canadian dividend stocks I think are worth considering.
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Fortis
With a dividend yield of just 3.6%, Fortis (TSX:FTS) is a dividend stock many investors may not necessarily buy only for its yield. That said, this is a company I continue to come back to as a top dividend pick, for a number of reasons.
First, as a leading North American utility giant, Fortis’ millions of residential and commercial customers, many of which are locked into long-term regulated contracts with stipulated increases over time, provide incredible cash flow stability. And with the rise of AI and other power-hungry technologies out there, Fortis stands to benefit as its pricing power improves alongside surging demand.
These regulated revenue streams also provide incredible cash flow stability to Fortis, which the company has utilized to both pay down debt and improve its balance sheet, but also return more and more capital to shareholders. In fact, the company has done so each and every year, raising its dividend annually for more than five decades straight.
As both a growth, value, defensive and income pick, Fortis is one dividend stock that still looks like a screaming buy right now, even after its recent run.
Scotiabank
With one of the highest dividend yields among major Canadian banks (and even some small and mid-sized banks as well), Bank of Nova Scotia (TSX:BNS) remains one of my top picks in this sector for those seeking up-front yield.
This financial giant’s 4.4% dividend yield is impressive, and it’s even more impressive when investors consider the rally this stock has had over the past few months. Moving from a low of around $60 per share to around $100 per share at the time of writing, Scotiabank is firing on all cylinders as investors look for ways to play strong lending growth in Canada and internationally.
I think Scotiabank’s solid balance sheet, above-average yield for a traditionally high-yielding sector, and plenty of global growth opportunities if we do see weakness ahead, position this company well as a potential portfolio addition.
With plenty of dividend growth likely ahead as revenue and earnings continue to move higher, Scotiabank is a top option for those looking to create meaningful and consistent passive income for retirement.
