My 5 Favourite Dividend Stocks to Buy Right Now

These five stocks all generate stable cash flow and offer attractive dividend yields, making them five of the best to buy right now.

Daniel Da Costa

Author Bio Daniel joined The Motley Fool Canada in 2019 and brings experience in banking, investing, and financial analysis. Growing up as the son of a proprietary stock trader and educator, he developed an early interest in financial markets and a passion for helping Canadians improve their financial well-being. His work spans investment research, economic analysis, and econometric modelling, with a focus on understanding the broader forces that influence businesses, markets, and the economy. As an investor, Daniel looks for high-quality businesses with long-term growth potential, reliable income, and attractive valuations. Outside of finance, Daniel enjoys spending time with his family, playing hockey, running, and sailing. Areas of Expertise Investment research, economic analysis, econometric modelling, banking, financial analysis, business fundamentals, long-term investing, dividend investing, and company valuation. Favorite Investment Quote "It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price." — Warren Buffett

Published March 26, 4:30 pm EDT

There’s no question that when it comes to building a significant passive income stream in the stock market, finding the best dividend stocks to buy can make a significant difference over the long haul.

So that doesn’t only mean avoiding chasing the highest yields, it also means ensuring the dividend stocks you buy have solid underlying businesses.

For example, the best dividend stocks are consistently companies that generate steady cash flow, operate in essential industries, and maintain disciplined capital allocation. That’s why the best dividend stocks to buy right now are often large, well-established companies or real asset businesses with predictable revenue streams.

Not only do these types of companies tend to perform well through different economic environments, but they also consistently reward investors with steady income and long-term growth.

So, with that in mind, if you’re looking for high-quality dividend stocks to buy right now, here are five of my top picks.

dividend growth for passive income — Source: Getty Images

Two of the most reliable dividend growth stocks to buy on the TSX

When it comes to finding reliable, long-term dividend growth stocks that you can buy and hold with confidence, there’s no question that Enbridge (TSX: ENB) and Brookfield Infrastructure Partners (TSX: BIP.UN) are two of the very best.

In fact, Enbridge, the massive $160 billion energy infrastructure stock, is one of the most widely owned dividend stocks in Canada for a reason.

The company operates one of the largest energy infrastructure networks in North America. That’s what makes Enbridge one of the best dividend stocks to buy for the long haul: the stability of its cash flow.

Most of the company’s earnings are generated through long-term contracts and regulated assets. This predictable revenue allows Enbridge to consistently generate strong cash flow, which supports its ever-growing dividend.

In fact, the company has increased its dividend every year for more than three decades, and today offers a yield of more than 5.1%.

Meanwhile, Brookfield Infrastructure is another high-quality dividend stock to buy now, offering investors exposure to essential infrastructure assets worldwide.

Just like with Enbridge, Brookfield’s Infrastructure assets generate stable and predictable cash flow because they provide services that are critical to the global economy. Furthermore, much of Brookfield’s revenue is supported by long-term contracts or regulated frameworks.

So, if you’re looking for a top long-term dividend growth stock to buy and hold for years, Brookfield offers an attractive yield of roughly 5.1% today.

Two top industry ETFs to buy for passive income

In addition to individual stocks, ETFs can also be some of the best investments you can buy, especially if you’re looking to increase your diversification while still generating reliable income.

For example, the BMO Equal Weight REITs Index ETF (TSX: ZRE) is one of the best ways to gain exposure to Canadian real estate.

REITs have long been some of the most reliable dividend-paying investments because they generate consistent rental income from tenants. And by owning a basket of REITs through the ZRE ETF, you’re not relying on just one property portfolio or one management team.

Right now, the ZRE offers an attractive yield of 4.8%, making it one of the best investments on the stock market that dividend investors can buy now.

Meanwhile, the BMO Covered Call Canadian Banks ETF (TSX: ZWB) is another top pick if your goal is to maximize income.

Canadian banks are already some of the best dividend-paying stocks on the TSX, but the ZWB ETF takes it a step further by using a covered call strategy to boost yield.

That means you’re giving up some potential capital gains in exchange for higher income, which can make a lot of sense in more uncertain or slower-growth environments, like we’re seeing today.

So, while most of the big bank stocks offer a yield between 2% and 4%, the ZWB currently offers a yield of roughly 5.5%.

A top stock made for dividend investors

Finally, one of the most straightforward dividend stocks you can buy is Pizza Pizza Royalty (TSX: PZA).

Pizza Pizza is simple because it collects a percentage of sales from its restaurant locations across the country. That makes the business relatively simple and highly focused on generating cash flow.

And because it doesn’t have to deal with the same operating costs as a traditional restaurant company, much of that cash flow can be returned directly to investors.

So, if you’re looking for a pure income stock offering an attractive but sustainable dividend, Pizza Pizza’s current yield sits at more than 5.7%.