When it comes to investing and picking which Canadian stocks to buy, it often feels like you have to choose between growth and dividends.
You either buy high-growth stocks that can increase in value quickly during strong economic environments but don’t pay much, if anything, in dividends or offer much downside protection.
Conversely, you can choose reliable dividend stocks that generate consistent income across different economic environments but don’t offer as much upside and can underperform during bull markets.
However, while that trade-off might seem true on the surface, and can certainly be the case at times, it’s also why many of the best Canadian stocks to buy for the long term can actually offer both.
These are well-established businesses that can consistently grow their operations and profitability over time. And that growth doesn’t just drive capital gains, it also allows them to consistently increase the cash they return to shareholders.
That combination is what accelerates the compounding effect and ultimately what builds wealth over the long haul. And that’s why finding the highest-quality Canadian dividend growth stocks to buy and hold, such as these two top picks, is so important for long-term investors.
Source: Getty Images
A high-quality REIT that still has plenty of growth ahead
If you’re looking for a reliable Canadian stock that can offer both years of attractive growth potential and appealing dividend income, there’s no question that a stock like Granite REIT (TSX: GRT.UN) is one you’ll want to consider.
Granite isn’t just a high-quality REIT that generates reliable cash flow and pays a steady monthly distribution, although that’s certainly a main reason why it’s one of the best dividend growth stocks Canadians can buy.
However, it’s also much more than that because Granite primarily owns industrial properties, including logistics and e-commerce facilities, which have been in incredibly high demand over the last several years.
In fact, that demand has pushed its occupancy rate to nearly 99% in recent quarters, which not only maximizes revenue in the near term but, more importantly, has allowed Granite to significantly increase rents.
In fact, in some cases recently, as leases have been renewed, the company has been able to raise rates by more than 40%.
That’s why it’s such a reliable dividend growth stock for Canadians to consider today.
And that growth in profitability isn’t just leading to a higher unit price over the long term, it allows Granite to continue increasing its distribution, which currently offers a yield of 3.7%.
So, while it may not be the highest-yielding REIT on the market, it’s one of the most balanced, which is why it’s a top pick for Canadian investors who want a stock that pays reliable dividends and a clear path for long-term growth.
One of the most reliable dividend growth stocks that Canadians can buy
In addition to a stock like Granite, on the other end of the spectrum, Canadian Utilities (TSX: CU) is a name that offers a different kind of balance.
As a utility stock, it’s certainly not a high-growth pick in the traditional sense. However, that doesn’t mean it doesn’t grow; it just grows in a much steadier and more predictable way, which is arguably more compelling for many investors.
In fact, Canadian Utilities is easily one of the most reliable dividend stocks you can buy in Canada, with the longest dividend growth streak of any company, currently sitting at more than half a century.
That alone tells you a lot about both the consistency of its profitability through many different economic environments, and also its ability to continue growing.
People never stop needing electricity or natural gas, regardless of what’s happening in the economy, which is why its business is so dependable.
And now, with significant investment going into infrastructure, especially in areas like power and data centres, there’s a long-term tailwind building.
So while the growth may not be explosive, it’s consistent, and when you combine it with its dividend, which currently yields around 3.8%, it’s a stock you can buy and hold with confidence.
And that’s the goal. Because when you combine reliable stocks like Granite, which offer a bit more growth, with stocks like Canadian Utilities, which offer more stability, you end up with a well-balanced portfolio that does both.
