Canadian investors have plenty of options when it comes to above-average yielders that still have upbeat growth prospects. Of course, if you crank up the dividend yield, the potential for growth and capital gains tends to take things a few notches down. Instead of looking to max out a yield of capital-appreciation potential, I believe that finding the right balance is a smart move for investors who want the best of both worlds.
What’s better, though, is that the stocks with the right mix of growth and dividends also happen to be best equipped to grow their dividends. So, maxing out dividend-growth potential instead of income or appreciation may very well be the underrated move that Canadian investors should consider as a part of their overall strategy. At the end of the day, you don’t need to be an income investor, a growth investor, or a value-minded investor.
Arguably, you can and probably should aim to be all three, as they don’t have to be mutually exclusive. Sometimes the best rewards are with the value names that have generous dividends and strong (but often underrated) earnings growth trajectories. In this piece, we’ll have a look at two names that I think fit the bill.
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Enbridge
No list of premier large-cap Canadian dividend growers is complete without pipeline top dog Enbridge (TSX: ENB), which has been a dependable source of income through all sorts of “weather” conditions the industry has been through over the decades.
In a prior piece, I highlighted the recent energy-related dip as an opportunity to give the midstream players a second look, given they’re not really all that dependent on oil prices being above a certain level. Whether oil rockets higher again, perhaps past the US$115 per-barrel mark, or plunges below US$80, Enbridge is positioned to keep the dividend raises coming as cash flows continue to swell. For investors, it’s less about where oil’s hovering and more about how smooth things are going operationally.
In any case, the shares have only continued to march lower despite the robust fundamentals, gas transmission tailwinds, and more big catalysts in store for 2027.
As a utility-like dividend play on steroids, I think most dividend growth investors could do very well by hanging onto the name and adding to dips. After another 1% drop on Monday, shares are down 6% from their peak. I think the punishment across the energy sector has now been overdone, especially when it comes to the premier energy transportation plays.
Restaurant Brands International
Restaurant Brands International (TSX: QSR) stock is another rewarding dividend grower that’s also poised to reward long-term investors with nice gains. The stock is in the midst of a hot run, now up 14% in three months, thanks in part to some impressive quarters.
With a 3.36% dividend yield, plenty of growth catalysts ahead, and a picture-perfect breakout setup, I wouldn’t sleep on the name, especially as the firm looks to opportunistically invest in innovation technologies that can help further enhance efficiencies behind the scenes.
Now, QSR stock isn’t known to be a big gainer, but given the huge improvements made (better food, nicer restaurants, and reasonable prices) and the runway to sprint down, I see no reason to take profits in what could be one of Canada’s next best dividend-growth heroes.
