There are some Canadian dividend stocks that most investors may wish to own for the extremely long haul. Undoubtedly, when it comes to growth stocks, especially the red-hot AI names, it’s all about the capital gains. And after a substantial surge, it can make sense to take profits off the table or eliminate a position.
With dividend payers, though, especially those with histories of generous dividend growth, I’d argue there’s less incentive to buy low and sell high. Instead, it may make more sense to hold for many decades, given the dividends that stand to come in.
In this piece, we’ll check in on two great dividend growers that might just be worth holding for the long run, given their track records of spoiling shareholders with dividend raises.
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CIBC
Shares of Canadian bank CIBC (TSX: CM) are about to wrap up one of the best years in recent memory. Right now, the $118.3 billion bank is up more than 40% year to date or close to 109% in the past two years. Undoubtedly, this underrated bank has seemingly been hotter than some of the mature AI tech plays out there.
And while the big banks could continue to be a source of strength for the TSX Index, investors should be ready to take advantage of dips that will happen along the road higher. Today, CIBC stock trades at a bit of a premium relative to historical averages, now going for 14.9 times trailing price to earnings (P/E). It’s definitely not the cheapest Canadian bank stock. In the past, shares of CM may have been discounted relative to its larger peers.
However, it appears those days are gone, and the case for sporting a premium to the peer group, I think, is getting stronger, especially after yet another strong earnings result powered by decent performance in the capital markets segment. Of course, the skeptics will argue that CIBC’s heftier exposure to Canadian mortgages may make it worth a discount again.
And that’d entail a bit of a correction from current levels. However, if you’re not put off by the mortgage exposure (especially the uninsured ones), it’s tough to bet against CIBC, given its recent earnings momentum. With a decent 3.4% dividend yield, improved net interest margins (NIMs), and the potential for lower rates (and the wealth effect) to ease jitters over the mortgage book, 2026 might be another solid year for the bank. Just don’t expect another 40% gain.
CN Rail
CN Rail (TSX: CNR) has been attempting to bottom out in the past six months. And while it does seem like the $130 level is a base of support, I’m not so sure if the tides can turn significantly higher over the near term. Either way, the stock is historically cheap at 18.6 times trailing P/E.
And the dividend yield continues to be on the higher end of the past-decade range, currently at 2.64%. With a swollen yield, a compressed valuation multiple, and plenty of efficiency investments that may start to pay off in the new year, there are reasons to be a buyer as most others hold off amid the latest gruelling pullback.
As one of the most well-respected dividend growers, I think investors might wish to buy while the name is down and out because the next sustained rally might be a furious one.
