For Passive Income Investing, 3 Canadian Stocks to Buy Right Now

Don’t look now, but these three Canadian dividend stocks look poised for some big upside, particularly as interest rates appear to be headed lower.

Key Points
  • Sienna Senior Living, Fortis, and Manulife Financial are identified as top Canadian stock picks for passive investors, offering potential for capital appreciation and stable dividends in uncertain economic times.
  • Each company is positioned to benefit from sector-specific growth trends: Sienna with demographic shifts in senior living, Fortis with consistent dividend growth in utilities, and Manulife with global expansion in wealth management.

Finding passive income in the stock market may sound like an exciting and rewarding journey, and it is. There are plenty of top dividend stocks investors can choose from across a range of industries. So, finding a starting point can be the most difficult challenge to many out there.

Fear not, because this list of three top Canadian stocks that look like buying opportunities right now for passive investors thinking long-term could be a winning concoction for those looking to put capital to work in these uncertain times. Here’s why I think these three companies are particularly high-quality options right now.

a person watches stock market trades

Source: Getty Images

Sienna Senior Living

In terms of real estate investment trusts (REITs) I think could have big upside in the year ahead, Sienna Senior Living (TSX: SIA) stands out to me as a top stock to consider.

Looking at the chart above, it’s clear that the market feels the same way. Surging from less than $10 per share in early 2024 to more than $20 per share today, that’s a double-up return over a two-year period for a company in a rather boring sector investors may not think of as high-growth.

The fact is, with demographic shifts clearly reshaping how consumers are spending (with more and more spending coming from baby boomers relative to their younger counterparts), old age care is becoming a bigger slice of the economic pie in all countries (Canada included).

With a dividend yield of 4.6% supported by robust growth trends and a solid balance sheet, this is one REIT I think is worth buying here for both passive income and capital appreciation upside.

Fortis

Fortis (TSX: FTS) remains my top dividend stock pick for long-term investors trying to navigate these murky waters right now.

The utility company’s 52-year track record of raising its dividend stands out to me as the primary reason why investors should consider Fortis. Companies with dividend growth track records this long would be punished heavily by the markets for stopping (or even slowing the rate of) these increases over time. Thus, I’d suggest that Fortis’ dividend growth profile is among the best on the TSX right now.

And with its core regulated utility business supported by consistent and predicable top and bottom line growth, never mind the growth catalysts AI and other high-powered technologies provide, Fortis is a company I think can provide above-average growth for some time to come.

Those looking for a dividend yield of 3.5% in a defensive sector with plenty of upside potential ought to take a look at Fortis right now.

Manulife Financial

Last, but certainly not least on this list of dividend stocks to consider adding before the end of the year, we have Manulife Financial (TSX: MFC).

Shares of the Canada-based insurance and wealth management giant have surged as insurance companies as a whole have been re-rated higher. Much of this has to do with a re-steepening of the yield curve, which allows Manulife to match its long-term liabilities with higher long-term fixed income returns.

However, the other piece to the story around Manulife centers around its global growth prospects, particularly in the world of wealth management. The company’s wealth management business has boomed in recent years, driven mostly by surges in Asian markets. As Manulife increases its exposure to these high-growth markets, I think more upside may be available to passive income investors looking to lock in the company’s 3.5% dividend yield today.

Fool contributor Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool recommends Fortis. The Motley Fool has a disclosure policy.

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