What Are the Safest Dividend Stocks in Canada Right Now?

With their reliable business models, consistent dividend payouts, and disciplined capital investment strategies, these two dividend stocks are well suited for conservative income-focused investors seeking stable, long-term returns.

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Key Points
  • For stability and reliable income in uncertain times, consider defensive dividend stocks such as TC Energy and Bank of Nova Scotia, both of which offer strong business models and consistent dividend growth.
  • TC Energy's extensive infrastructure and growth initiatives, combined with Bank of Nova Scotia's strategic shift towards higher-return operations and solid dividend history, make them ideal for income-focused investors seeking resilience amidst market volatility.

The Canadian equity markets have maintained their upward momentum amid improving geopolitical conditions in the Middle East, with the S&P/TSX Composite Index gaining more than 15% year to date. However, persistent inflation, a slowing global economy, and lingering geopolitical tensions continue to create uncertainty. In this environment, investors can consider these two defensive dividend stocks to add stability to their portfolios while generating reliable income.

Let’s take a closer look at these two stocks.

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TC Energy

TC Energy (TSX: TRP) owns and operates an extensive natural gas pipeline network across North America, along with a portfolio of power generation facilities with approximately 4.7 gigawatts of capacity. Around 98% of its earnings are generated from rate-regulated assets and long-term take-or-pay contracts, making its financial performance relatively resilient to commodity price fluctuations and broader economic conditions. Supported by these stable cash flows, TC Energy has increased its dividend for 26 consecutive years and currently offers an attractive forward yield of 3.96%.

Looking ahead, rising natural gas production across North America should continue to drive demand for TC Energy’s infrastructure, creating significant long-term growth opportunities. To capitalize on this trend, the company is expanding its asset base, with $2 billion in projects already in service and another $3.5 billion expected to come online this year. In addition, TC Energy has approximately $20 billion in projects in its development pipeline. These investments could support adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) of $12.6 billion to $13.1 billion by 2028, with the midpoint implying an annualized growth rate of 5.4%.

Given its contracted business model, reliable cash flows, and disciplined expansion strategy, TC Energy is well positioned to sustain its dividend growth and deliver stable long-term returns.

Bank of Nova Scotia

Another dividend stock that is well positioned for this uncertain environment is Bank of Nova Scotia (TSX: BNS), which has paid uninterrupted dividends since 1833. The financial services company provides a broad range of financial services across multiple countries, generating diversified and reliable revenue streams that support consistent shareholder payouts. It has also increased its dividend at an annualized rate of 4.5% over the past decade and currently offers an attractive forward yield of 3.68%.

Looking ahead, Scotiabank is sharpening its focus on higher-return North American operations while reducing its exposure to riskier, lower-return Latin American markets. The bank is pursuing the acquisition of MapleMark Bank, which could strengthen its presence in the United States, particularly in the growing Dallas market. It is also seeking to acquire the remaining shares of Scotia Group Jamaica Limited that it does not already own, which could improve capital allocation and operational efficiency. These initiatives could enhance the quality and stability of the bank’s earnings over time.

Meanwhile, a relatively higher interest-rate environment should continue to support Scotiabank’s core lending business. The bank has also launched a new share repurchase program in April that allows it to buy back up to 15 million common shares through April 2027, reducing its outstanding share count by approximately 1.2% and further enhancing shareholder returns. Backed by its established business, strong dividend track record, and strategic growth initiatives, Scotiabank remains an attractive option for long-term income-focused investors.

Fool contributor Rajiv Nanjapla has no position in any of the stocks mentioned. The Motley Fool recommends Bank Of Nova Scotia. The Motley Fool has a disclosure policy.

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