The Dividend Stocks I’d Consider the Smartest Use of $5,000 Right Now

Suncor Energy (TSX:SU) could be a great bet for value investors seeking income and appreciation this year.

Key Points
  • Build a balanced “barbell” portfolio with U.S. growth/AI exposure alongside TSX dividend payers, so you’re not relying on one style to work all year.
  • As energy and materials cool off, Suncor looks like a dip-worthy dividend hedge with solid momentum, a ~2.7% yield, and a low valuation that can help if oil prices stay elevated.

There’s no shortage of top-tier dividend stocks on the Canadian stock market. And while the relative lack of “growthier” tech plays might cause some Canadian investors to head south for their exposure, I do view the heavy-hitting TSX dividend payers (and growers) as having what it takes to start attracting some of that capital beyond the Canadian borders. Indeed, if you want to go for growth and AI, the U.S. market might be the place to go.

However, if you’ve got $5,000 or so and are on the hunt for premier dividends (think higher yields, lower multiples, and steady cash flows) and hard, real assets, I think the Canadian market brings a lot to the table, especially after a year that saw the TSX Index top the S&P 500 as the AI trade began to cool off a bit.

Instead of asking if you should be in growth or value (which includes higher-yielding dividend payers), I think it makes most sense to own both in a barbell portfolio of sorts. That way, when the AI trade cools (or plunges), and value is back in the hot seat, you’ll be in a better spot than some of the less-diversified investors who aren’t as prepared for the weather conditions to change.

Canadian energy stocks are rising with oil prices

Diversification and dividends: The play for the rest of 2026?

Undoubtedly, with the mounting geopolitical uncertainties powering oil prices higher, the big takeaway from this year, I think, is that energy stocks remain one of the essential hedges. And after the past-year bull run in gold and silver, I view the top-tier miners as very impressive, perhaps less-correlated ways to add a bit of torque to your portfolio and perhaps exposure to “hidden” value that investors started to wake up to as the so-called “debasement trade” picked up steam.

Now that the energy and materials sectors are taking a breather while the AI trade heats up again (perhaps moving on from the initial CapEx fears), I think there might be an opportunity to buy the dip in some fantastic dividend payers that can help steady your portfolio as the worst of the energy shock looks to move through markets.

The dividend payers are worth checking out amid increased choppiness

Sure, it feels like investors are less nervous about the conflict in Iran, and the high oil prices are settling in. But that’s exactly why it might be prudent to start thinking about buying the trades that worked better earlier on in the war as they come in further. At the end of the day, lower prices accompany higher yields. And for long-term investors looking to enhance their diversification, Suncor Energy (TSX: SU) looks like a shining star.

It didn’t take too long for shares of Suncor Energy to come flying back. With new highs now in sight after a very fast 10% bounce off April’s lows, I do think that the low-cost energy play, which is now worth close to $110 billion, is worth careful consideration. Of course, I praised the name when shares were correcting, and while the easy money has been made, I still think the name stands out as a great value for investors seeking yield (2.7% right now), momentum, and, perhaps most importantly, a hedge against higher oil prices for the rest of the year.

In those worst of shocks, it’s energy that might be the only thing that stands tall. And at 9 times forward price-to-earnings (P/E), I don’t think the name is at all expensive despite its jarring 85% run in the past year. Simply put, Suncor covers a lot of bases for a lot of investors: value, share price momentum, dividends, dividend growth, and now, low beta (0.60).

Fool contributor Joey Frenette has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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