2 Canadian Dividend Giants to Buy With Rates on Hold

These two Canadian dividend giants offer income, stability, and long-term growth potential while interest rates remain on hold.

Key Points
  • Canadian dividend giants like Enbridge and TD Bank offer stable dividends and resilient operations, making them ideal for long-term investment amidst interest rate uncertainties.
  • Enbridge provides dependable income through its vast pipeline network and renewable energy portfolio, boasting a 5.11% dividend yield with consistent annual increases for 31 years.
  • TD Bank combines U.S. market expansion with reliable dividend growth, offering long-term investors dividend increments for over a decade and a starting yield of 2.61%.

When the Bank of Canada met last month, the Governing Council decided to leave interest rates unchanged, holding its policy rate at 2.25%. For investors, that adds uncertainty around where the next move will be. That’s where investing in Canadian dividend giants can help.

Interest rates can affect almost every corner of the economy. Higher borrowing costs can weigh on consumers and businesses, while lower rates can stimulate borrowing and investment.

Fortunately, investors don’t need to make those portfolio decisions around the next Bank of Canada announcement. That’s because Canadian dividend giants are proven businesses with stable dividends and established operations that largely remain unaffected by news headlines.

While there’s no shortage of great investments that fit that description, there are two Canadian dividend giants for investors to consider owning at this time.

A close up color image of a small green plant sprouting out of a pile of Canadian dollar coins "loonies."

Source: Getty Images

Enbridge: Start with dependable income

When it comes to generating a passive income stream, Enbridge (TSX: ENB) is one of the first names that investors turn to. That’s because the company offers a diversified mix of businesses across the energy sector that generate a recurring and stable revenue stream which leaves room for growth and dividends.

That portfolio includes Enbridge’s massive pipeline business, which contains both crude and natural gas segments. The network itself is one of the largest and most complex pipeline systems on the planet, transporting massive amounts of both each day.

The sheer necessity of the commodities hauled makes the pipeline business defensive. That necessity also makes it a recurring income generator that’s backed by long-term contracts.

Beyond the pipeline operation, Enbridge also boasts a growing renewable energy portfolio and a natural gas utility. Both offer similar defensive appeal and reliable revenue generation.

But what makes Enbridge one of the best Canadian dividend stocks is that quarterly dividend. As of the time of writing, the stock offers a 5.1% dividend yield.

Even better, Enbridge has provided annual upticks to that dividend for 31 consecutive years without fail. That includes a 3% increase announced this year.

That consistency is what makes Enbridge one of the best Canadian dividend stocks to own for long-term growth.

TD Bank: Buy for dividend growth and long-term quality

The second stock for investors to consider is Toronto-Dominion Bank (TSX: TD). TD is the second largest of Canada’s big bank stocks, serving over 28 million customers across its businesses.

TD’s operations include both personal and commercial banking in Canada, along with wealth management and wholesale banking. The bank also enjoys a growing presence in the U.S., where it operates a branch network stretching from Maine to Florida.

That U.S. business adds another major market to TD’s diversified banking platform.

Turning to income, TD has provided quarterly dividends to investors without fail for nearly two centuries. As of the time of writing, TD offers a yield of 2.6%.

More importantly, TD has provided annual upticks to that dividend for over a decade. In fact, over the past decade, TD’s dividend has more than doubled. The latest 4% increase brings the dividend to $1.12 per share and is payable to shareholders later this month on July 31.

For long-term investors, TD’s attractive dividend growth streak can be just as important as the starting yield. That’s because a growing dividend produces more income over time, and reinvesting those payments helps to accelerate growth through compounding.

This makes TD an appealing option for investors seeking out Canadian dividend giants to add to their portfolios.

Are you buying these Canadian dividend giants?

No stock is without risk, and that’s why the importance of diversifying cannot be stated enough.

Fortunately, both Enbridge and TD offer defensive appeal to investors while serving different purposes in a portfolio made up of Canadian dividend giants.

Enbridge provides a higher starting yield and predictable cash flow from critical infrastructure. TD offers a lower yield, but offsets that with a combination of dividend growth, scale, and long-term compounding potential.

For those investors building a diversified portfolio of Canadian dividend giants, both TD and Enbridge offer strong long-term potential for growth and income.

Buy them, hold them, and watch your portfolio (and income) grow.

Fool contributor Demetris Afxentiou has positions in Enbridge and Toronto-Dominion Bank. The Motley Fool recommends Enbridge. The Motley Fool has a disclosure policy.

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