Amid the announcement of a ceasefire and ongoing peace talks between the United States and Iran, Canadian equity markets have staged a strong recovery, with the S&P/TSX Composite Index climbing over 9.3% from its lows last month. However, uncertainty about the outcome and durability of these negotiations persists.
In this environment, investors may benefit from adding high-quality dividend stocks that offer both portfolio stability and a steady stream of passive income. Notably, dividend-paying stocks have historically outperformed their non-dividend-paying peers over the long term. With that in mind, here are my top two picks.
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Bank of Nova Scotia
Bank of Nova Scotia (TSX:BNS) stands out as a solid dividend stock, supported by its long history of payouts, strong cash flows, and attractive yield. The bank offers a diverse suite of financial services spanning +55 countries, and its diversified revenue streams help generate stable, reliable earnings, enabling it to pay dividends consistently since 1833. It has also grown its dividend at an annualized rate of 4.7% over the past decade and currently offers a forward yield of 4.28%.
The bank’s financial performance has also shown improvement, with adjusted earnings per share rising 16.5% year over year to $2.05 in its most recent first-quarter results, driven by strength across all four business segments. Additionally, its CET1 (common equity tier-one) ratio increased by 10 basis points to 13.3%, reflecting a stronger capital position and enhanced ability to absorb potential losses during periods of financial stress.
Alongside these improvements, BNS is advancing its multi-year strategy to strengthen its North American presence while optimizing and reducing exposure to higher-risk, lower-return Latin American markets. This shift could enhance earnings stability and support more sustainable long-term growth, thereby reinforcing its capacity to deliver consistent, growing dividends. Despite these positives, the company’s valuation looks reasonable, with the next-12-month (NTM) price-to-sales and price-to-earnings multiples of 3.2 and 12.3, respectively. Considering these factors, BNS appears to be an attractive buying opportunity at current levels.
Enbridge
Enbridge (TSX:ENB) is another compelling dividend stock, supported by its contracted business model, consistent dividend growth, and attractive yield. The energy infrastructure company operates an extensive pipeline network that transports oil and natural gas under a tolling framework and long-term take-or-pay contracts. In addition, it owns three natural gas utility businesses and a portfolio of renewable energy assets backed by power-purchase agreements.
A large share of its earnings comes from regulated assets and long-term contracts, with about 80% linked to inflation. This structure makes Enbridge’s financial performance relatively resilient to macroeconomic fluctuations and economic cycles. Backed by this stable business model and strong cash flows, the company has paid dividends for more than 70 years and increased its payout for 31 consecutive years. It currently offers a forward yield of 5.39%.
Looking ahead, rising oil and natural gas production and consumption in North America continue to support demand for Enbridge’s services. The company has identified approximately $50 billion in growth opportunities through the end of the decade and plans to invest $10–$11 billion annually to fund these projects. As these investments progress, management expects adjusted earnings before interest, taxes, depreciation, and amortization and distributable cash flow per share to grow at a steady single-digit pace. Given these factors, Enbridge appears well-positioned to sustain dividend growth, making it an attractive buy amid this uncertain outlook.
