Sometimes the best dividend stock is the one whose yield looks almost disappointing.
A 7% yield can grab attention immediately. Yet, give me a company capable of increasing a smaller dividend year after year, and the math starts getting much more interesting. Income rises, reinvested dividends buy more shares, and those additional shares can produce even more income. Ten years gives that snowball plenty of room to grow.
That’s why I’d look beyond today’s yield when choosing Canadian dividend stocks to hold until 2036. I want rising earnings, a manageable payout, and a business capable of sending more cash my way without slowly starving itself to do it.
Insurance companies can be particularly interesting here. They collect premiums before many claims are paid, invest that money, and earn additional profit when premiums exceed claims and expenses. A combined ratio below 100% means the insurer made an underwriting profit. Do that consistently while investing billions of dollars effectively, and dividend growth becomes considerably easier to fund.
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A dividend decade
That’s why Intact Financial (TSX: IFC) would be my pick today. Intact is Canada’s largest property-and-casualty insurer, with operations spanning Canada, the United States, the United Kingdom, and Europe. It sells home, auto, commercial, and specialty insurance while also operating insurance distribution and restoration businesses.
The dividend isn’t enormous. At a recent $266.05 share price, its $1.47 quarterly payment works out to a yield of roughly 2.2%. Yet Intact increased that dividend by 11% this year, marking its 21st consecutive annual increase. Better still, management says dividend growth has compounded at approximately 10% annually over the past decade.
No investor should assume that 10% dividend growth simply continues because it appeared on the last report. Still, using Intact stock’s historical decade-long rate demonstrates why dividend growth can become so powerful through compound growth.
| YEAR | ILLUSTRATIVE ANNUAL DIVIDEND PER SHARE |
|---|---|
| 2026 | $5.88 |
| 2031 | $9.47 |
| 2036 | $15.25 |
That projection simply applies the historical 10% growth rate and isn’t a forecast. Still, it shows why I’m far more interested in Intact’s ability to keep growing than whether its starting yield clears some arbitrary number today.
Why buy now?
Intact stock recently sat about 13% below its 52-week high of $305.52, even while book value per share climbed 13% year over year to $111.73. It also produced a 17% operating return on equity and finished the second quarter with $3.8 billion of capital margin after spending $181 million repurchasing shares.
That financial muscle gives management options. It can invest, buy back shares, raise the dividend, or pursue acquisitions when attractive opportunities appear. Management continues to target roughly 10% annual growth in net operating income per share over time, which would provide plenty of fuel if achieved.
Insurance isn’t a toll road. Wildfires, floods, storms, and other catastrophes can produce ugly quarters, as investors saw when elevated catastrophe losses hurt second-quarter underwriting income. Intact stock also has to price policies correctly as repair and rebuilding costs climb.
Bottom line
Those bumps are precisely why I’d think in decades rather than quarters. Intact stock has built a long record of profitable underwriting, dividend increases, and capital deployment across different economic environments. If that machine keeps doing its job, I suspect the dividend cheque arriving in 2036 could make today’s 2.2% yield look rather unimportant.
