When it comes to investing your hard-earned capital, there’s no question that dividend stocks are one of the best ways Canadians build wealth over the long haul.
Not only do dividend stocks allow you to participate in the growth of the businesses you own, but you also generate passive income along the way that you can either spend or reinvest to buy even more shares.
That’s why so many Canadian investors build portfolios around high-quality dividend stocks; companies with reliable cash flow, proven business models, and a long history of increasing their payouts can be excellent long-term investments.
Of course, plenty of well-known dividend stocks have already become core holdings in countless Canadian portfolios, such as names like Fortis or Enbridge.
Those companies deserve their reputation, and if you can buy them at attractive valuations, they’re often great long-term investments that form the core of many investors’ portfolios.
But because they’re so popular, they can often trade at premium valuations, and there are plenty of other high-quality dividend stocks that deserve consideration too.
So, if you’re looking to build a diversified portfolio of high-quality Canadian dividend stocks, here are five more of the top picks to consider today.
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2 high-yield dividend stocks made for Canadian investors
If your main goal is generating passive income and boosting the yield your portfolio generates, two of the top Canadian dividend stocks to consider are Alaris Equity Partners (TSX: AD.UN) and Diversified Royalty (TSX: DIV).
Both stocks are ideal for dividend investors because they have asset-light business models that consistently generate reliable cash flow that can be returned to investors.
For example, Alaris provides financing to private businesses in exchange for long-term distributions, while Diversified Royalty earns royalty income from a growing portfolio of well-known brands.
That’s why they’re stocks made for Canadian dividend investors. Both companies are built to generate dependable cash every month that supports their attractive dividend yields.
In fact, right now, even with Alaris trading near its 52-week high, it still yields more than 6.1%. Meanwhile, Diversified Royalty currently yields roughly 6.3%, showing why both remain some of the top choices for investors looking to boost the income their portfolios generate.
3 high-quality dividend growth stocks to buy and hold for years
If you’re looking for a little more balance between income and long-term growth, three of the best dividend growth stocks on the TSX are Capital Power (TSX: CPX), Canadian Tire (TSX: CTC.A), and CT REIT (TSX: CRT.UN).
Capital Power is an independent power producer and one of the best defensive growth stocks to consider as a long-term investment.
The company continues investing in new power generation projects to support long-term growth while also returning more cash to shareholders each year through consistent dividend increases. That combination of growth and income has helped make it one of the top essential infrastructure stocks to own. CPX currently offers a yield of roughly 4%.
Meanwhile, Canadian Tire is another high-quality Canadian dividend stock to buy and hold for the long haul. While many investors recognize the company for its dominant retail business and iconic brand, it has also continued growing through all kinds of headwinds over the years, including the pandemic, high interest rates, inflation, and changing consumer spending, all while remaining profitable and continuing to increase its dividend.
That resiliency is arguably even more impressive than its dividend growth. However, its dividend growth record is impressive too, with a 16-year streak of annual increases, while the stock currently yields roughly 3.6%.
Growing cash flow
CT REIT is another way to gain exposure to Canadian Tire, although with a little more income and a little less growth potential. Canadian Tire is both the REIT’s majority owner and by far its largest tenant, accounting for roughly 90% of its rental income.
That relationship provides stable rental income, while the REIT continues growing through acquisitions and development projects.
So, although it generally offers a higher yield than Canadian Tire itself, currently sitting at roughly 5.1%, it still has opportunities to continue increasing its cash flow over time, which is why it continues to be a top choice for investors building a Canadian income portfolio.
