The Smartest Dividend Stocks to Buy With $1,000 Right Now

Turn $1,000 into a starter dividend-growth portfolio with two Canadian stocks that have clear paths to rising payouts.

Amy Legate-Wolfe

Author Bio Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Her work can also be found at Canada's National Observer, where she writes on the business side of climate action. Before joining Motley Fool Canada, Amy wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Social Media Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published July 23, 10:30 am EDT

| More on: ALACTC.A

Key Points

Canadian Tire has raised its dividend for 16 straight years and offers a higher yield tied to everyday consumer demand.
AltaGas starts with a lower yield, but targets 5% to 7% dividend growth through 2030 from utilities and exports.
Both have risks, so reinvest the dividends and let time, not a huge starting yield, do the heavy lifting.

Sixteen years of dividend increases can turn one modest investment into a paycheque that grows alongside its owner. Add a second company targeting dividend growth through 2030, and $1,000 suddenly has a far more interesting job than gathering dust.

The biggest yield won’t always produce the best result. A double-digit payout can disappear quickly when cash flow weakens, while a smaller dividend backed by rising earnings may keep growing for years. So, why not get both?

man in bowtie poses with abacus — Source: Getty Images

What makes a smart dividend stock?

For me, I’d look for manageable payout commitments, improving operations, and a business capable of raising prices or expanding its assets. Reinvesting payments from those Canadian dividend stocks can then purchase more shares, allowing each new dividend to help produce the next one.

Diversification still matters, even with only $1,000. That leads me to Canadian Tire (TSX: CTC.A) and AltaGas (TSX: ALA), which combine consumer spending with regulated utilities and energy infrastructure.

Canadian Tire

Canadian Tire reaches households through its namesake stores, SportChek, Mark’s, financial-services business, and Triangle Rewards program. That collection gives the company several ways to earn from customers buying automotive products, clothing, sporting goods, and everyday household essentials.

First-quarter retail revenue rose 5% excluding petroleum, while automotive sales increased for the 23rd consecutive quarter. Diluted earnings reached $2.02 per share, showing that cautious consumers haven’t stopped maintaining their vehicles or searching for value.

Canadian Tire now pays $1.80 per share quarterly, equal to $7.20 annually and a yield near 3.7% at recent prices. The company raised its annual dividend for the 16th consecutive year, giving investors a strong income record before moving into infrastructure.

AltaGas

Meanwhile, ALA stock operates regulated natural gas utilities while processing and exporting Canadian energy products to overseas customers. The utilities provide steadier earnings, while its midstream assets offer growth as global buyers seek reliable North American energy supplies.

That combination produced record normalized earnings before interest, taxes, depreciation, and amortization (EBITDA) of $818 million in the first quarter, up from $689 million a year earlier. ALA stock also exported nearly 125,000 barrels of liquefied petroleum gases per day, keeping its terminals impressively busy.

Future growth could come from the Ridley Island Energy Export Facility, which was approximately 75% complete at quarter-end. ALA stock also signed another agreement supporting a Virginia data centre, connecting its regulated network to rising electricity and backup-power demand.

The company pays $1.34 per share annually after raising the dividend 6% for 2026. Management expects dividends to grow by 5% to 7% annually through 2030, giving investors a smaller initial yield near 2.4% but a clearer path toward rising income.

Earning income

Using recent prices, two Canadian Tire shares and 11 AltaGas shares would invest almost the entire amount. The portfolio could generate about $29.14 annually before any future dividend increases.

COMPANY	RECENT PRICE	NUMBER OF SHARES	ANNUAL DIVIDEND	ANNUAL TOTAL PAYOUT	FREQUENCY	TOTAL INVESTMENT
CTC.A	$198.05	2	$7.20	$14.40	Quarterly	$396.10
ALA	$54.49	11	$1.34	$14.74	Quarterly	$599.39
TOTAL				$29.14		$995.49

That said, Canadian Tire remains exposed to weaker consumer spending and credit losses, while ALA stock must complete major projects on budget and manage substantial debt. Those risks could create volatility, although owning two different businesses keeps one difficult quarter from controlling the entire investment.

Bottom line

Canadian Tire offers a higher starting yield and a 16-year dividend-growth record, while ALA stock brings expanding infrastructure and targeted increases through 2030. Reinvesting their payments could let compound growth turn today’s $1,000 into a much more useful income stream over the decades ahead.