Dividend stocks are a reliable way to generate passive income. However, after a strong rally in many of Canada’s top income stocks, attractive buying opportunities have become harder to find as rising share prices have pushed valuations higher and yields lower.
Thus, a short-term market pullback may create an opportunity to buy fundamentally strong dividend stocks at more attractive valuations, locking in higher yields and enhancing long-term total return potential.
Against this background, here are three top Canadian dividend stocks to buy on a pullback.
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Top Canadian dividend stock #1: Emera
Emera (TSX:EMA) is an attractive dividend stock to buy on a pullback. The company owns a portfolio of regulated electric and natural gas utilities, giving it stable earnings and reliable cash flows even in uncertain economic conditions. This resilience supports both its share price and ability to reward shareholders.
The stock has climbed more than 27% over the past year, driven by its defensive business model, disciplined capital investments, and growing energy demand. Emera has also raised its dividend for 19 consecutive years. It currently pays a quarterly dividend of $0.73 per share, offering a yield of about 3.8%.
Looking ahead, management expects annual dividend growth of 1% to 2%, supported by a $20 billion capital investment plan. The program is expected to expand Emera’s regulated asset base and boost long-term earnings. Investments in solar power, grid modernization, energy storage, transmission, and natural gas infrastructure position Emera to benefit from rising electricity demand while returning significant cash to its shareholders.
Top Canadian dividend stock #2: Fortis
Fortis (TSX:FTS) is another compelling Canadian dividend stock to buy on a pullback. Shares of this utility company have gained about 30% over the past year, thanks to its resilient business model, growing dividend, and rising electricity demand.
Fortis derives its earnings from regulated electricity and natural gas transmission and distribution businesses. Because these operations generate predictable revenue and cash flows, the company is less exposed to commodity price volatility and broader economic fluctuations. This stability provides a strong foundation for sustaining and growing shareholder payouts.
Fortis has a solid dividend track record. Backed by stable, rate-regulated operations, Fortis has raised its annual dividend for 52 consecutive years. Moreover, it offers a dividend yield of 3.2%.
Looking ahead, Fortis expects to increase its annual dividend by 4% to 6% over the medium term, supported by a $28.8 billion capital investment program. This investment is expected to expand the company’s regulated asset base, drive consistent earnings growth, and strengthen its ability to continue rewarding shareholders.
At the same time, the ongoing increase in electricity demand provides an additional tailwind for the company’s long-term growth prospects.
Top Canadian dividend stock #3: Toronto-Dominion Bank
Toronto-Dominion Bank (TSX:TD) is one of the most attractive Canadian dividend stocks to buy on a pullback. Shares of this leading Canadian bank have gained over 76% in a year. Further, the financial services giant has rewarded shareholders with solid dividend payments.
TD has paid dividends for more than 169 years and has grown its dividend at an average annual rate of about 8% over the past decade.
The bank’s ability to sustain dividend growth is supported by a diversified revenue base, strong momentum across its business segments, and a continued focus on operational efficiency. With a dividend payout ratio of roughly 40% to 50%, TD retains ample room to reinvest in its business while maintaining a sustainable and growing dividend.
Looking ahead, steady growth in loans and deposits, a diversified operating platform, improving margins, and ongoing efficiency initiatives are expected to support consistent earnings growth. In addition, TD’s strategic acquisitions could further strengthen its competitive position, providing another catalyst for long-term growth and future dividend increases.
