Dividend Investing: Top Canadian Dividend Stocks of 2025

Dividend stocks are stocks that pay you for investing in them. The amount you receive is based on the stock’s dividend yield and value.

For instance, a 4% yield with a $12 share price results in $0.48 per share. Having a diversified holding of dividend stocks is one of the best ways to earn passive income. Dividend stocks can have the double benefit of appreciating in value like other stocks.

Many dividend stocks are large-cap, blue-chip companies with positive cash flow, an established brand, and reliable revenue. For that reason, they’re typically less volatile than other stocks, such as growth and small caps.

While dividend stocks might not appreciate significantly over time, they can provide a stable and growing income stream, which could be an ideal investment strategy for risk-averse investors or those nearing retirement. 

Of course, dividend stocks are investments, and, as such, they do have some risks. To help you pick the right dividend stocks for your portfolio, here’s a crash course in dividend stock investing.

What are dividend stocks?

Dividend stocks are shares of publicly traded companies that distribute regular payments to stockholders. These regular payments are called “dividends,” and they’re paid out on a periodic basis, such as quarterly, semi-annually, or annually.

Yes, this type of stock literally pay you for investing in them. Not only do dividend stocks pay out a portion of the company’s profits, but the stock itself can appreciate over time. This double whammy of dividends and stock price appreciation can lead to some major gains for stockholders.

The best dividend stocks will give you predictable payments, which can become a reliable source of passive income. Of course, dividend payouts can change, especially if the company or the economy itself starts to falter. But with a diversified dividend portfolio, you could receive payouts with a higher degree of certainty.

How do dividend stocks work?

To understand how dividend stocks work, let’s look at an example.

Let’s say you own 100 shares of a dividend stock, with each share worth $12. The dividend stock has a 4% yield and pays out annually, which means you get 4% of $12 multiplied by your total holding each year. That comes out to around $0.48 per share, or $48 for your 100 shares.

That might not seem like a lot. But let’s assume you have $10,000 to invest, and you choose the dividend stock above. Your $10,000 can buy around 833 shares.

Dividend Income Formula = (Share Price × Dividend Yield) × Number of Shares

• $12 × 4% = $0.48 per share
• $0.48 × 833 shares = $399.84 annually

If the yield and share price remain steady, you can earn around $400 per year. That’s a decent amount of passive income—especially for long-term investors.

A Double Win: Dividend + Capital Gains

Here’s where dividend stocks can really shine: if the stock price increases over time—say from $12 to $15—you’ll not only keep earning dividends, but you’ll also enjoy capital appreciation on your shares. That’s a double win. On the flip-side, the stock price could also drop, which is why we recommend you do your due diligence when researching stocks and playing the long-game. Over time the stock market is an incredible wealth-driver but give yourself the best chance with strong stocks and don’t try to time the market and miss out on home runs for a few bucks.

What You Can Do With Dividends

Once you receive your dividend payment, you have options:

• Reinvest into the same stock to grow your holdings (a popular choice in DRIP plans)
• Buy stock in another company
• Save or spend it as you wish

Dividends are a powerful way to build wealth, especially when combined with disciplined reinvesting and long-term holding.

Top high dividend stocks in Canada

By focusing on strong, solid companies that regularly increase dividends, a small sum of money could grow into something significant. Some of the best Canadian dividend stocks to consider as investments include:

Fortis

Fortis (TSX:FTS) is an electric and gas company that operates 10 utility transmission and distribution assets between Canada and the United States, worth around $58 billion. It also has electricity generation assets in the Caribbean. Fortis gets around 99% of its revenue from regulated assets, so you can trust its cash flow is predictable.

As far as dividend yield, the company doesn’t boast the highest yield in Canada. But because the company’s services are necessities (everyone needs electricity), you can trust the dividend will hold steady. In fact, Fortis has raised its yield for over 50 years, making it a newer member of the dividend kings.

The company pays dividends quarterly, with payments scheduled for March 1, June 1, September 1, and December 1. Its board has approved an increase for the upcoming December 1 dividend to $0.64 per share, up 4.1% from last year’s $0.615. While the yield sits at a modest 3.4%, the consistency of these payouts stands out. Fortis has grown its dividend from $1.36 annually in 2015 to $2.46 today, reflecting a compound growth rate of roughly 6.1% per year.

Fortis’ long record of dividend stability is backed by gradually improving earnings, with EPS rising about 4.8% annually. Growth is slow and the payout ratio is high, which is typical of mature utilities with limited reinvestment opportunities—but it’s also why these businesses return more cash to shareholders. Fortis continues to invest in new capital projects and acquisitions to support future dividend increases, extending its multi-decade track record of reliable income growth.

BCE Inc.

BCE Inc. (TSX:BCE), the parent company of Bell, remains one of Canada’s dominant telecom operators, controlling roughly a third of the national wireless market and maintaining a broad presence across internet, wireless, fibre, and media. Its scale, extensive infrastructure, and leadership in 5G deployment continue to anchor its long-term strategic position, even as its legacy media assets face ongoing pressure.

Earlier this year, BCE reduced its dividend for the first time in decades as rising interest costs, slowing revenue growth, and pressure on its media division made the previous payout unsustainable. The company’s dividend cut is an uncommon move for a major Canadian telco and shook investor confidence, driving the stock down from nearly $60 in 2022 to the low-$30 range today.

However, the reset has placed the payout on much firmer financial ground. BCE now pays $0.4375 per quarter, offering a 5.4% yield, one of the strongest in the sector. With the stock trading at 4.8 times trailing earnings, valuations have compressed enough that BCE is beginning to look like a deep-value opportunity for income-focused investors.

Looking forward, BCE is working through profitability headwinds as sales flatten and margins remain tight. A recovery hinges on rate cuts, disciplined expansion of fibre and wireless networks, and successful investment in emerging areas such as AI-ready data centres to help offset weakness in its media division. The company is also rapidly expanding into 5G technology, which is helping to sustain its upward growth.

Enbridge

Enbridge (TSX:ENB) is one of North America’s largest energy infrastructure operators, moving roughly 30% of the continent’s crude oil and nearly 20% of U.S. natural gas. Its network spans thousands of miles of liquids and gas pipelines, complemented by a regulated natural gas utility business, LNG partnerships, and a growing portfolio of renewables such as wind and solar assets. This diversification has allowed the company to generate reliable cash flow through multiple commodity cycles.

The company continues to accelerate its growth plans. Enbridge recently announced a US$1.4 billion expansion to its core oil transmission network and now has $35 billion in secured capital projects under development. Recent acquisitions—including three U.S. natural gas utilities, a Texas oil export terminal, and a major U.S. wind and solar developer—have significantly broadened its footprint. These assets, together with projects like the Woodfibre LNG facility, position Enbridge to capture rising demand for gas, export capacity, and renewable generation.

This steady buildout supports the company’s long-term income strategy. Enbridge expects distributable cash flow to grow roughly 5% annually beyond 2026, a pace strong enough to sustain further dividend increases. The company has raised its dividend for 30 consecutive years, and at today’s prices investors receive a 5.6% yield. Even after a strong two-year share price recovery, Enbridge remains a defensive, cash-generating utility-like investment with a clear runway for continued dividend growth.

How to invest in Canadian dividend stocks

When you look at a list of Canadian dividend stocks, you’ll immediately notice one thing: it’s long and constantly growing. That’s not a bad thing, but it can make choosing the best Canadian dividend stocks feel daunting.

To help you pick dividend stocks, here are a few steps to get started.

1. Start with companies you know

When you look at history’s most successful investors, such as Warren Buffett and Peter Lynch, you’ll notice a trend: they always invest in companies they understand. And when it comes to whittling down your list of dividend stocks, it might be useful to eliminate companies you’re not familiar with.

Of course, familiarity doesn’t just mean that you recognize the brand. You might know Fortis by name, but if you don’t know its business model, or how it makes money, then you don’t really know Fortis all that well.

On the other hand, if you’re familiar with the gas and electric industry as a whole, then you might be better equipped to understand the individual company, Fortis, that makes up a large part of it.

So take a look at the list below (or any list of dividend stocks for that matter) and identify a few that you’re already familiar with. This will help you get a head start on your research.

2. Research past performance

Once you’ve identified a few dividend companies that you know well, next you’ll want to dive into their dividend history.

At this stage, you’re looking for stocks that have had a strong performance over the long run, which includes upward stock appreciation and regular dividend increases. You might also want to look for stocks that have low volatility (beta numbers could help you here), as well as large market capitalizations.

Basically, you want to be sure the dividend company is going to keep paying out regular dividends, even during recessions.

You also want to check the company’s revenue and earnings growth: steady earnings over long periods of time (as opposed to erratic ones) are a good sign the company has a solid financial footing.

3. Look at the payout ratio

A dividend payout ratio is the percentage of a company’s earnings that’s paid out to stakeholders as dividends. For example, if a company earns $500 million this year and it pays $300 million to shareholders as dividends, then the dividend payout ratio would be 60%.

Of course, you might think the higher the payout ratio, the better. But that’s not always the case. If a company is dishing out 75% or more of its earnings to shareholders, then the dividend might not be sustainable over the long run. Some very large-cap companies can sustain high payout ratios, but smaller companies could risk overextending themselves. 

An ideal payout ratio is around 60%. This means the dividend is likely sustainable and should continue to be paid out over the years you hold the stock.

4. Check the yield

Dividend yield is the percentage of a stock’s price that a company pays to shareholders each year. For instance, if a stock trades for $100 per share today and the company gives $4 per share, then the dividend yield would be 4%.

Dividend yield is important, but it shouldn’t be the only factor that attracts you to certain dividend stocks. Yields often change over time, especially due to market fluctuations and economic disruptions.

While having a stock with a high yield can help you earn more passive income now, you also want that stock to be a strong business that will weather market downturns.

Do all stocks pay dividends?

No, not all stocks pay dividends.

Typically, dividends are paid out by large, well-established companies that have the money to pay back investors. Often, these companies have grown so big, they no longer reinvest money in themselves.

This is different from, say, growth stock companies that reinvest huge amounts of capital in their expansion, research, and product development (growth stocks often don’t pay a dividend).

Are dividend stocks right for you?

Dividend stocks are great long-term investments that can provide a stable stream of passive income. Though they might seem ideal for near retirees or risk-averse investors, they can benefit any type of investor, even if they appreciate at a slower rate.

Of course, like other stocks, dividends can experience volatility over short periods of time, which is why you want to research companies upfront to be sure you’ve chosen one wisely.

Great dividend companies follow some clear characteristics. They have a long history of increasing their dividends, while not cutting yields during hard economic times. They’ve also established themselves in their respective industries, becoming businesses and brands that consumers almost can’t live without.

Investors who aren’t interested in researching and choosing individual dividend stocks for investments may seek to invest in dividend mutual funds or dividend exchange-traded funds (ETFs).

These funds hold a bundle of dividend stocks within one investment, and they’ll distribute dividends to investors from that holding.

Here are some top dividend ETFs in the TSX:

• Vanguard FTSE Canadian High Dividend Yield Index ETF (TSX:VDY)
• iShares S&P/TSX Composite High Dividend Index ETF (TSX:XEI)
• BMO Canadian Dividend ETF (TSX:ZDV)

Dividend payment types

Dividend payments come in various forms, each offering unique benefits to investors. Common types include cash dividends, typically paid directly to shareholders’ accounts, and stock dividends, which provide additional shares instead of cash. Other forms include special dividends, often distributed during strong financial periods, and property dividends, which are less common and involve non-cash assets. Understanding these dividend payment types is crucial for investors aiming to maximize their returns while aligning with their financial goals.

What are Dividend Knights?

Dividend knights on the Toronto Stock Exchange (TSX) are distinguished by their ability to consistently pay dividends to shareholders for 5 years or longer, making them a reliable source for fixed income and potential capital appreciation over the long term. Many belong to the blue-chip category, characterized by large market caps and stable business models that prioritize profit-sharing with shareholders over aggressive growth strategies.

This stability allows them to maintain uninterrupted dividend programs, despite potential fluctuations in dividend yield— the percentage of a company’s share price paid out as dividends annually— which can vary with market performance. This makes dividend knights a potentially attractive component in an investor’s portfolio, especially for those seeking steady income.