Investing in quality dividend stocks is a solid strategy for those seeking inflation-beating returns over time. While the TSX index offers you a yield of roughly 2% in 2026, there are several Canadian dividend stocks that provide a sizable payout right now.
One such blue-chip company is Emera (TSX: EMA), a Halifax-based utility that currently yields over 4%.
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A Canadian Dividend Aristocrat built for income investors
Emera has raised its payout for 17 consecutive years, earning it a spot among Canada’s Dividend Aristocrats, a club reserved for companies that have grown their dividend for at least five consecutive years.
Emera owns regulated electric and gas utilities in Canada, the United States, and the Caribbean. Regulators set the rates these utilities can charge, which means cash flow arrives on a predictable schedule, regardless of how the broader economy is performing. Compared to sector peer Fortis, another Dividend Aristocrat, Emera’s yield is higher.
Emera’s slightly higher yield partly reflects a higher payout ratio and the market pricing in a bit more risk, which is worth knowing before you take on exposure.
Is the dividend stock a good buy?
A high yield only matters if the payout is sustainable across market cycles.
Chief Executive Officer Scott Balfour told analysts the company remains on track to deliver compound annual adjusted earnings per share growth above its 5% to 7% target through 2026, and expects that pace to hold through 2030.
Emera aims to invest $4 billion towards capital expenditures this year, and expects annual rate base growth of at least 7% through 2030, which should drive future dividend hikes.
Emera has also been tidying up its balance sheet. The approved sale of New Mexico Gas is expected to bring in after-tax proceeds of roughly US$650 million to US$700 million, which will be used to lower balance sheet debt.
Chief Financial Officer Jared Green offered a candid look at how the company thinks about a financial cushion during the call. Asked about credit metrics, he said the team likes having some room above its downgrade threshold and wants that room to keep growing.
“I would like to see us being able to have that increase a little bit more through time so that we can just have that extra flexibility… probably the kind of the mid 12s is a good place, but being able to get to the higher 12s over the longer term would be a much better place to be from my happiness,” Green said, referring to the company’s operating cash flow-to-debt ratio.
No income stock comes without trade-offs, and Emera has a few worth watching.
Utility stocks often trade like bond proxies, so a sudden uptick in interest rates can pressure the share price even if the underlying business is steady.
Emera also carries meaningful debt to fund its infrastructure plans, and a sizable chunk of its operations sit in Florida, adding currency and regulatory variables that a pure Canadian utility wouldn’t have.
None of that erases the core appeal. It just means this is a stock to size appropriately, not a stock to bet the farm on.
The Foolish takeaway
Settling for 2% in this environment means letting inflation win. Emera offers a way to roughly double that yield while owning a growing, regulated utility with a management team that talks openly about protecting its balance sheet, not just growing it.
