Dividend stocks are among the best assets a Canadian investor can own. Stocks with consistent dividend growth track records are among the most reliable in the global markets. Canada is a particularly fertile ground for searching for dividend stocks, as the market has a lot of high yield stocks and dividend growers. In this article, I’ll explore three must-own blue chip stocks for Canadians. While these stocks are not necessarily ones to run out and invest all of your money into, they are pillar portfolio stocks, as evidenced by their strong representation in the country’s top exchange-traded funds (ETFs).
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Brookfield Asset Management
Brookfield Asset Management (TSX: BAM) is a Canadian asset management company whose shares yield 3.2%. The company manages various public and private investment vehicles, including private funds, public partnerships, real estate investment trusts (REITs), and private credit funds (through its subsidiary Oaktree Capital).
Brookfield Asset Management’s main strength is its business model. As a pure service business, with no hard assets (or next to none), the company doesn’t need to worry about depreciation, maintenance costs or obsolete equipment. Instead, it uses its relationships and knowhow to make investments on behalf of its clients. Its excellent reputation and deep connections in global finance help to ensure that a steady stream of clients comes in the door.
One very appealing thing about Brookfield Asset Management is its growth track record. The company increased its revenue 11% and its earnings 43% over the last 12 months. Since it was spun off from its parent company (Brookfield Corp) just recently, it doesn’t have a long-term growth track record to speak of. However, old annual reports from the older, combined company show pretty good historical growth.
Finally, Brookfield Asset Management has over $100 billion in committed but un-invested capital, which is sure to increase fee-related earnings once it is deployed. All in all, it’s an impressive company with a lot of things going for it.
Enbridge
Enbridge (TSX: ENB) is a Canadian pipeline company with a 6.1% dividend yield. The company is economically indispensable, shipping oil all across North America, and supplying 75% of Ontario’s natural gas. Despite being asset heavy and expensive to run, Enbridge is profitable, with a 42% gross profit margin, a 9.4% net income margin, and a 2% free cash flow margin. Trading at 22 times earnings, it is not “super” cheap, but it’s cheaper than the broader markets, with their heavy weighting in AI stocks that have been flying high over the last few years. Overall, I would feel pretty comfortable holding Enbridge stock.
Royal Bank of Canada
Royal Bank of Canada (TSX: RY) is one of Canada’s oldest and most entrenched banks. Its stock pays a dividend, with a 2.8% yield. It is Canada’s biggest bank by market cap. It has a strong presence in Canadian retail banking, with high brand recognition and good customer satisfaction. It also has a good position in U.S. investment banking. Despite its already large size and “mature” industry category, the company is also doing considerable growing, with its revenue up 15% and earnings up 25% in the trailing 12-month (TTM) period. With a 150-year history, Royal Bank of Canada is one of Canada’s most reliable companies.
