Finding top-tier opportunities in the stock market is what we’re all after. That’s why you’re here reading this piece.
For dividend investors, the pool of companies to choose from is as wide as it is confusing. There are high-yield dividend stocks that provide good income today, but the market may be signalling that their future dividend growth potential may be limited (or a cut or elimination may be in the future). For those seeking lower-yielding stocks, growth rates may be higher and implied by a recent surge in a particular stock’s price. But that may not necessarily portend well for returns down the road.
So, what are the best options for dividend investors to consider? Well, here are three Canadian stocks on my short list of opportunities right now that I think are worth considering.
Let’s explore the most promising Canadian stocks for dividend investors, featuring standout picks like Suncor, Dream Industrial REIT, and Canadian Tire, each offering unique advantages in their respective sectors.
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Suncor
As far as blue-chip Canadian energy stocks are concerned, Suncor (TSX:SU) has to be one of my top picks.
The Western Canadian oil sands producer has seen its share price surge higher this year, despite the price of Western Canadian Select slumping. That’s mostly because Suncor has among the best underlying operating fundamentals in its core sector. What that means is that Suncor can pull a barrel of oil out of the ground more cheaply than its competition. In doing so, Suncor is able retain solid margins and cash flow growth, which it continues to pass onto shareholders in the form of dividends and share buybacks.
With a current dividend yield of 3.8% and plenty of capital appreciation upside left (in my view), this is a stock I think any long-term investor can buy at current levels and wait for the next rally to materialize.
Dream Industrial REIT
There are few sub-sectors of the real estate market I like better than industrial real estate. The versatility this asset class provides investors who are forward-looking in their approach is remarkable. Dream Industrial REIT (TSX:DIR.UN) and others in this space manage the warehouses and distribution centres that support the tremendous economic growth driven by same-day delivery and other e-commerce trends.
The company’s current dividend yield of 5.3% is well-covered and supported by a rock-solid portfolio of real estate assets in some of the most desirable markets in North America. For investors who find themselves underweight in terms of their real estate exposure, Dream Industrial is a top name I think warrants consideration right now.
Canadian Tire
One Canadian stock that’s actually trended sideways over the past five years that I think could be a solid buying opportunity right now is none other than Canadian Tire (TSX:CTC.A).
Canadian Tire stock is currently trading just slightly below the value it was trading at five years ago. That’s incredible, considering Canadian Tire’s dividend yield is above the 4% level now, after years of dividend growth.
Once one of the few retailers that saw price appreciation in the past, investors appear to be moving past brick-and-mortar retail names to companies that operate solely online. The thing is, Canadian Tire has bolstered its position within this space, and it has one of the best online order/pickup programs of any Canadian retailer. In that regard, I do think this is a company that’s positioned for continued growth over time, no matter where Canadians choose to pick up their tires or home goods.
