When it comes to saving your money and putting it back to work for you, one of the most common investments that Canadians consider is Guaranteed Investment Certificates (GICs). These are especially popular for investors who want to earn income. However, while they offer some advantages, in many cases, high-quality dividend stocks are the far better buy.
So why are GICs so popular? Because they are safe. The word guarantee is in their name. So, you know exactly what you’re getting. You simply pick the GIC and lock in a rate, then you wait patiently, and at maturity, you get your money back plus interest.
However, while there are certainly advantages to earning a guaranteed return, the rates GICs offer are typically low, especially if you aren’t willing to lock up your cash for longer periods. And although those returns are guaranteed, the longer you lock up your cash, the more you risk higher inflation eating away at your returns, or missing opportunities in the market if the economy starts booming.
That’s the trade-off with a GIC. It’s safe in the sense that your principal is protected. However, your upside is considerably capped.
And while investing in the stock market is inherently riskier than a guaranteed investment, high-quality dividend stocks that you can buy and hold for years with confidence are almost always the much better option.
You still earn income regularly, often quarterly or even monthly. But you also own real businesses that can grow earnings, raise dividends, and increase in value over time.
So, if you’ve got cash to put to work, here are three reliable dividend stocks that offer yields comparable to or higher than many GICs, start paying you immediately, and provide long-term capital gains potential as well.
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A top real estate stock to buy for dividend investors
If you’re looking for reliable income, an attractive yield and a dividend that has been increased every year since the stock went public, CT REIT (TSX: CRT.UN) is one of the best picks on the TSX.
It owns a portfolio of retail properties across Canada, and the key detail is that the vast majority of those properties are leased to Canadian Tire.
That relationship is what makes the business so stable. Canadian Tire is not just its largest tenant, it’s also the majority unitholder, which aligns incentives and provides long-term stability.
Because of that structure, CT REIT generates extremely predictable rental income, which is why it has been able to increase its dividend every year since going public over a decade ago.
And today the dividend growth stock offers a yield of roughly 5.5%, showing why it’s one of the best dividend stocks to buy now and a far better option than GICs.
Two core portfolio stocks to own for decades
In addition to CT REIT, two more high-quality Canadian companies with reliable operations and attractive dividends that you can buy and hold as core portfolio stocks are Nutrien (TSX: NTR) and Emera (TSX: EMA).
Nutrien is ultra-reliable and defensive because it’s one of the largest producers and distributors of crop nutrients in the world, meaning it plays a critical role in global food production. Farmers need fertilizer every year. That demand doesn’t disappear just because the economy slows.
And while fertilizer prices can be cyclical, over the long term, global population growth and the need to improve crop yields create a strong structural tailwind.
Furthermore, Nutrien continues to strengthen its business and vertically integrate its operations, which not only strengthens the entire business with synergies and scale, it also expands its footprint and makes Nutrien even more competitive.
Today it offers a yield of more than 3% and has increased that dividend by roughly 20% over the last five years.
Meanwhile, Emera is another high-quality dividend stock to buy over GICs, especially if you’re primarily worried about safety.
Emera is a regulated utility operating across Canada and the United States, some of the most reliable stocks in the economy. Utilities are ideal dividend stocks because they generate predictable earnings since their profit rates are set through regulatory frameworks.
Therefore, not only does Emera offer a yield of roughly 4.2% today, but it has also increased its dividend every year for nearly two straight decades.
