While many companies offer either capital appreciation or dividend income, few companies have shown that they can deliver both over the long term. These businesses typically combine resilient operating models, dependable cash generation, and sustainable growth opportunities, enabling them to consistently create value for shareholders. Against this backdrop, let’s examine three Canadian stocks that stand out for their potential to generate meaningful capital gains while providing investors with a reliable stream of dividend income.
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Hydro One
Hydro One (TSX: H) is a leading Canadian utility serving about 1.5 million customers across Ontario. As a pure-play electricity transmission and distribution company, roughly 99% of its revenue comes from a regulated framework. This resilient business model gives the utility strong earnings visibility while insulating its financial performance from commodity-price volatility and broader economic fluctuations. Moreover, Hydro One has consistently expanded its rate base at an annualized rate of approximately 5%, supporting steady growth in earnings and cash flows.
The company’s resilient financial performance has translated into solid shareholder returns, with 93.4% of total shareholder return over the last five years at an annualized return of 14.1%. The utility has also steadily increased its dividend, with the payout growing at an annualized rate of 5.4% since 2017. At present, the stock offers a forward dividend yield of approximately 2.78%.
Looking ahead, Hydro One has 15 transmission projects at various stages of development and construction, creating opportunities for further rate-base expansion. Moreover, Ontario’s growing population and continued residential development should create sustained demand for electricity transmission and distribution infrastructure.
With a highly regulated business model, predictable cash flows, a track record of dividend growth, and a sizeable capital-investment pipeline, Hydro One offers investors a compelling combination of stability and long-term growth potential.
Savaria
Second on my list is Savaria (TSX: SIS), a global provider of accessibility and mobility solutions. Its diversified manufacturing footprint and established distribution network enable the company to serve customers across multiple international markets while providing flexibility in navigating geopolitical and trade-related challenges.
Savaria is also positioned to benefit from favourable demographic trends, particularly the aging global population, which should drive sustained demand for its products and services. Meanwhile, the company continues to invest in product innovation and pursue strategic acquisitions to broaden its market presence and unlock additional growth opportunities.
Reflecting its strong growth outlook, management expects revenue and adjusted earnings before interest, taxes, depreciation, and amortization to increase at annualized rates of 11.8% and 10.4%, respectively, through the end of this decade. Savaria also pays a monthly dividend of $0.04916 per share, translating into a forward yield of 1.99%.
With solid financials, favourable secular growth trends, recurring monthly dividends, and a reasonable forward price-to-earnings multiple of 20.1, Savaria offers an attractive long-term growth and income opportunity.
Canadian Natural Resources
My final pick is Canadian Natural Resources (TSX: CNQ), which operates a portfolio of large, high-quality, long-life oil and natural gas assets. Its efficient operations and relatively modest capital reinvestment requirements help keep costs and breakeven levels low, enabling robust profitability and cash flow across commodity-price cycles.
This resilient business model and strong cash generation have supported an impressive dividend-growth track record, with the company increasing its dividend at an annualized rate of more than 20% over the past 26 years. Its quarterly payout of $0.615 per share currently translates into a forward yield of 3.72%.
CNQ is also investing to expand production capacity, having spent $4.4 billion in the first two quarters and targeting about $7.6 billion in capital expenditures this year. Management expects annual production of 1.637 million to 1.682 million barrels of oil equivalent per day, with the midpoint representing 5.7% year-over-year growth. Elevated commodity prices could further strengthen its financial performance and support shareholder returns.
With approximately five billion barrels of oil equivalent in reserves and a reserve life of roughly 30 years, CNQ also offers substantial long-term resource depth. Its combination of production growth, strong cash flows, and sustained dividend growth makes it an appealing long-term opportunity.
