For years, infrastructure stocks were portfolio-ending stocks, as the red lines and straight lines dominated their stock price charts from 2014 until 2025. In that entire decade, environmental rules and project and construction delays due to slower approval rates plagued infrastructure stocks. But the world has changed for infrastructure stocks after Mark Carney became the Prime Minister of Canada on March 14, 2025. Among his nation-building focus is infrastructure for energy, logistics, artificial intelligence (AI), and housing.

Why I think now is the moment to invest in infrastructure

The infrastructure sector is cyclical and needs government support. The Canadian government is fast-tracking approvals by streamlining regulatory approvals, allocating federal funding, and creating a Major Projects Office. The biggest challenges for infrastructure projects are regulatory delays and capital costs. With the government addressing these issues, companies are expanding their capital program.

You can see critical capital projects from Enbridge, Pembina Pipeline, Capital Power, and BCE. Enbridge has US$40 billion worth of green energy and natural gas pipeline projects scheduled to commission in the next three years. Recently, the federal government announced $10 billion in federal financing, the largest clean energy investment in North American history.

Which infrastructure stocks to buy now

You can invest in AI and energy infrastructure stocks that are investing capital. But the drawback is that their stocks might not grow immediately, as high capital expenditure will increase debt and depreciation, thereby affecting net profit and free cash flow in the short-term. However, their growth could pick up as projects come online and start paying for themselves. They can be good dividend payers in the future.

But if you are looking for capital appreciation, construction companies are a good investment. They are the ones who are winning the infrastructure orders. They are the recipient of the capital expenditure. Just as the AI boom benefitted semiconductor stocks more than AI applications in the initial growth cycle, construction stocks will benefit from the infrastructure boom.

Bird Construction

Bird Construction (TSX:BDT) is a stock worth considering for short-term capital gains. Its order book has grown 44% in 2025 to $11.1 billion. Among these orders are some high-investment projects like the BCE AI data centre, Woodfibre LNG Project, and nuclear facilities. Bird has experience in building energy transmission projects and could be a key beneficiary of the additional federal funding that will boost clean energy projects.

Among all construction companies, I prefer Bird Construction because of its strong balance sheet. The company’s net debt is less than 1 times its adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA). It is prioritizing high-margin projects and expects to grow its adjusted EBITDA margin from 6.5% in 2025 to 8% by 2027. The cyclical rally has increased the stock price to its all-time high, making value investors nervous about entering at this point.

However, cyclical stocks like Bird Construction rally exponentially during the initial phase of order wins. During the execution phase, their growth slows as investors have already priced in the project earnings into the stock price on the news of order wins.

The growing government investment in infrastructure shows that more orders are in the cards, which means another growth cycle is likely.

Celestica stock

Not an infrastructure stock but a supplier to AI infrastructure developers, Celestica (TSX:CLS) is a third-party electronics manufacturer. All the capex investment in AI and connectivity infrastructure needs Ethernet switches and storage. This boosted demand for Celestica’s manufacturing services. It even expanded to become an original design manufacturer, creating an opportunity to earn higher income.

While the stock has already priced in revenue growth from network expansion, the demand for Enterprise chip solutions from hyperscalers presents new growth areas. The current dip is a buying opportunity as growth will widen as more buildings are built.

Investor takeaway

The infrastructure cycle is still in the early stage, creating a buying opportunity to benefit from another six months to one year of a cyclical rally.

The post Why I Think Now Is the Moment to Invest in Infrastructure appeared first on The Motley Fool Canada.

More reading

• Celestica by the Numbers: 62% Revenue Growth and Real Strong Margins
• Why I Use My TFSA, Not My RRSP, as My Income Engine
• The TSX Is Charging: Here Are 2 Stocks I’m Watching
• Here Are 3 Growth Stocks I’d Buy for My TFSA This August
• The Canadian AI Stocks Wall Street Isn’t Hyping

Fool contributor Puja Tayal has no position in any of the stocks mentioned. The Motley Fool recommends Capital Power, Celestica, Enbridge, and Pembina Pipeline. The Motley Fool has a disclosure policy.

The TSX Index is charging, with a 4.4% rally in the first half of August. Leading this charge are technology stocks, with Shopify and Constellation Software (TSX:CSU) seeing a sharp rally of 20–30%. After tepid growth in May and June, artificial intelligence (AI) momentum is picking up again, as the latest earnings show positive revenue and earnings growth from AI. This time, the stocks to buy are Constellation and Celestica (TSX:CLS).

The two TSX stocks to watch as they ride the next AI rally

Constellation Software

AI and Constellation Software are not exactly the right pair, but hear this. In its latest earnings call, Constellation Software chief executive officer Mark Miller said that the company is experimenting with various AI tools, trying to show clients what is possible. The decision to give that extra buck for AI or not is the client’s call. His exact words were, “You can build products fast, but selling them is a whole other thing.”

This AI experiment can have two outcomes:

• Either the AI experiment fails and mission-critical clients stick to legacy software. That means Constellation’s recurring cash flow from maintenance will continue. This is a high possibility in the government, healthcare, and banking sectors, where clients are concerned about adopting AI and the cloud.
• Or the experiment succeeds, and clients pay for AI solutions. That will boost Constellation’s organic growth. So far, AI is at an experimental stage, and it is too early to say if clients are willing to pay.

Unlike other software companies which have a single AI at its center, Constellation’s AI strategy is decentralized. Its operating companies specializing in their respective verticals are testing AI at their level. This reduces concentration risk and makes AI adoption flexible. In either case, Constellation will stand to win.

I am bullish on Constellation stock because it will benefit from either scenario: an AI bubble burst or AI proliferation.

How to value this TSX stock

Most investors make the mistake of valuing Constellation like a regular software stock – on its revenue growth rate. It should be valued as a late-stage private equity firm, which focuses on holding cash-generating assets for the long term. They buy software companies with good cash flow at a bargain price using cash. Most owners sell their companies at a discount as they are retiring, and finding buyers for a private company is tough. Constellation lets the software company operate independently while extending management support to improve operating efficiency. It aims to increase cash flow, which it can reinvest to buy another company.

Hence, the right way to value Constellation is through the price-to-earnings (P/E) ratio. The stock is trading at an attractive valuation of 19 times its forward  P/E ratio. Considering a 57% earnings per share (EPS) growth rate, it has strong growth potential.

Celestica

Another TSX stock worth watching or holding now is Celestica, as it sees orders from the Enterprise segment materialize. This is the segment that caters to AI compute for hyperscalers and has higher margins. You may see a shift in the income statement with profits growing faster than revenue. It has guided a 190% year-over-year increase in Enterprise revenue in the third quarter of 2026.

Celestica has even revised its 2026 guidance for adjusted EPS from $10.15 to $11.30 and free cash flow from $500 million to $600 million. The stock is trading at 27.7 times its forward P/E ratio, which is a reasonable valuation. However, any earnings beat may send the stock to the next growth cycle. What makes me confident about Celestica’s long-term growth is management’s outlook for 2027, where it expects accelerated revenue growth compared to 2026. Management is even raising $3 billion in equity capital for capacity expansion and working capital needs to meet long-term demand.

How to value this TSX stock

The right way to value Celestica is using the revenue growth rate. It is a third-party manufacturer that has expanded to an original design manufacturer. I won’t be surprised if Celestica uses capex to expand its product line beyond Ethernet switches and storage devices to cater to AI infrastructure demand.

The post The TSX Is Charging: Here Are 2 Stocks I’m Watching appeared first on The Motley Fool Canada.

More reading

• I’m Using These 2 Canadian Stocks as My TFSA Cornerstones
• Why I Think Now Is the Moment to Invest in Infrastructure
• If You Missed Shopify’s First Run, Don’t Ignore These 2 Canadian Growth Stocks
• Celestica by the Numbers: 62% Revenue Growth and Real Strong Margins
• Down 6.8% After Earnings, Is Constellation Software a Good Stock to Buy Now?

The Motley Fool has positions in and recommends Constellation Software and Shopify. The Motley Fool recommends Celestica. The Motley Fool has a disclosure policy. Fool contributor Puja Tayal has no position in any of the stocks mentioned.

Canadian income investors looking to turn a $15,000 capital commitment into a meaningful passive income stream have a strong opportunity following the second-quarter 2026 earnings season. Allocating $5,000 into three top-tier dividend-paying Canadian stocks can construct a balanced three-stock mini-portfolio yielding $977.96 in annual passive income.

A $5,000 investment in each of Enbridge (TSX:ENB) stock, Slate Grocery Real Estate Investment Trust (TSX:SRG.UN) and Automotive Properties Real Estate Investment Trust (TSX:APR.UN) units could generate about $977.96 in annual passive income. Here’s how.

Enbridge stock: Buy the post-earnings dip to make steady passive income

A recent 10% dip in Enbridge stock following its July 31 second-quarter earnings installment presents an attractive entry point for long-term-oriented income investors.

ENB stock dropped because GAAP earnings fell short of market forecasts due to temporary margin compression from new capital projects coming online, non-cash charges, and a new share prospectus filing. However, the company’s core cash flow remains solid. With management projecting 2026 distributable cash flow of roughly $5.90 per share, the current dividend payout ratio sits comfortably around 65.8%, well inside management’s target range of 60% to 70%.

It pays “loyal” investors a 5.5% dividend yield from an irreplaceable network of energy pipelines and gas utilities, and Enbridge stock remains a reliable cash flow machine as it dabbles into renewable energy projects.

Investing $5,000 buys approximately 71 shares at recent prices, generating $68.87 quarterly or $275.48 annually in passive income.

Slate Grocery REIT

A $5,000 investment in Slate Grocery Real Estate Investment Trust units can pay you an equivalent of $29.81 CAD in monthly income distributions, translating to C$357.73 per year in passive income at current CAD/USD exchange rates.

Slate Grocery REIT owns 115 grocery-anchored properties spanning 15.2 million square feet located across 23 U.S. states. The portfolio boasts a robust 93.6% occupancy rate and a weighted average lease term of 4.4 years, which provides USD-denominated rental income visibility through 2030.

Slate’s core portfolio strength lies in its below-market rents: in-place rents average $13.10 USD per square foot compared to the U.S. market average of $24.79 USD going into the third quarter of 2026.

During the second quarter, the REIT achieved renewal spreads of 16.7% and new lease spreads of 41%, driving same-property net operating income up 2.3% over the past year. While its adjusted funds from operations (AFFO) payout ratio reached 113.1% due to high tenant improvements and leasing costs, the portfolio’s funds from operations (FFO) payout ratio remained respectable at 87.6%.

With 90.2% of its debt fixed at an average rate of 5%, interest costs remain contained while strong rental spreads may support long-term distribution sustainability.

Automotive Properties REIT

Even as online shopping transforms retail, buying a vehicle remains largely a hands-on experience. Automotive Properties Real Estate Investment Trust capitalizes on this reality by consolidating Canada’s fragmented dealership real estate market. Its acquisition strategy drove a 22.8% surge in rental income and an 18.6% increase in distributable cash flow during the last quarter.

On August 14, 2026, the Canadian REIT announced a 2% distribution increase alongside its second-quarter earnings, marking its second consecutive year of annual raises. The trust owns 95 properties with a long weighted average lease term of 8.1 years providing strong visibility into rental income receipts. A conservative debt ratio of 47.5% leaves ample balance sheet room for future acquisitions.

The REIT’s second-quarter AFFO payout ratio improved to 78.3% from 80.7% a year prior. Its monthly distributions are well covered by cash flow, and management has room for another payout raise in 2027.

Buying 411 shares with a $5,000 allocation secures $28.72 monthly, or $344.75 per year in passive income.

How to make $977.96 in passive income

To make nearly $980 in annual passive income, invest $5,000 in each of ENB, SGR.UN, and APR.UN as follows:

Combining these three holdings creates a diversified income stream backed by essential infrastructure, necessity retail, and prime commercial automotive properties. Splitting $15,000 evenly across all three dividend stocks generates a total payout of about $977.96 every year.

The post Here’s How $5,000 in Each of These 3 Stocks Could Pay You $977.96 appeared first on The Motley Fool Canada.

More reading

• Enbridge vs. Telus: Which Is the Better Dividend Stock to Own Through 2030?
• 2 Dividend Stocks to Hold in a TFSA for 20 Years
• If Your GIC Is Maturing This Year, Don’t Wait to Build the Next Income Stream
• 3 Dividend Stocks Built to Keep Paying Through Any Market Condition
• 3 TFSA Habits That Work While Saving But Backfire in Retirement

Fool contributor Brian Paradza has no position in any of the stocks mentioned. The Motley Fool recommends Automotive Properties Real Estate Investment Trust, Enbridge, and Slate Grocery REIT. The Motley Fool has a disclosure policy.

The latest earnings season is a mixed bag, with some reporting strong revenue and earnings growth and some reporting losses. Sadly, Algonquin Power & Utilities (TSX:AQN) fell on the red side, reporting a 13% year-over-year dip in adjusted net income despite 3% revenue growth. For those who held the stock back in 2022, it lost 60% –70% of its value over the years. The high leverage sitting on its balance sheet – $8.75 billion – pulled the company into the red after the Bank of Canada began interest rate hikes in 2022, from 0.25% to 5.00%.

Algonquin Power & Utilities saw multiple management changes in the last four years. In the quest to turn around the company from losses to profits, Algonquin has made some progress. But the question remains whether it is a good utility stock to buy now.

The turnaround of Algonquin, a work in progress

Utilities generally have a high leverage of over 130% of their equity. Algonquin Power & Utilities’ debt was $7.5 billion in 2022 when it planned to acquire Kentucky Power for $2.6 billion. That was also the year Algonquin completed the acquisition of Liberty Utilities (New York Water) Corp for $609 million.

Amidst these acquisitions, interest expense soared 33% while revenue surged 21.6%. As the financing costs skyrocketed, its margins collapsed. To top it off, $300 million in impairment of renewable energy assets pushed the utility into losses.

What followed was something investors couldn’t imagine. Algonquin fired its former executive team, cancelled the Kentucky Power deal, and decided to sell its loss-making renewable energy division. It slashed dividends twice and did everything to reduce costs.

On January 8, 2025, the company finally sold its renewable energy business for $2.1 billion and used the net proceeds to reduce debt by $1.5 billion. In 2026, Algonquin became a pure-play regulated utility company.

Is Algonquin a good stock to buy now?

Going by valuation metrics, Algonquin appears cheap, with a forward price-to-earnings (P/E) ratio of 16.5 times and price-to-sales (P/S) ratio of 1.76 times. It is cheaper than Fortis’ forward P/E of 22 times and P/S ratio of 3.2 times. However, Algonquin is still a risky stock. The regulated utility business is facing regulatory and legal delays.

A utility company has to bear high maintenance, safety initiatives, insurance, and property tax expenses. For instance, Algonquin spent an additional $3.3 million on gas safety and excellence costs in the second quarter of 2026.

The biggest risk is getting regulators to approve the operating and capital costs. If the cost is rejected, the utility bears the cost out of its own pocket. In the second quarter, Algonquin wrote off $17.2 million in a regulatory asset as only 75% of the wildfire-related maintenance and response costs were recovered from the 2020 Mountain View Fire.

Add to this, several pending billing cases to increase rates, which may or may not be approved. For instance, the Apple Valley and Park Water utilities in California reduced the rate, leading to a $3.1 million retroactive adjustment to July 2025.

Algonquin is also looking to change its domicile to the United States to save on cross-border tax. If approved by shareholders, the re-domicile could create $0.02 to $0.03 per share in annual tax benefits.

Unlike Fortis, which is steadily growing its rate base and earnings, Algonquin is still trying to stabilise its earnings. Until that happens, its valuations are not the right measure as the fundamentals are volatile.

Final verdict

The best utility stocks are the boring ones, where annual billings are sufficient to pay for expenses, interest on debt, and dividends. Algonquin’s volatile earnings saw its dividend per share of $0.07 exceed adjusted EPS of $0.04 in the second quarter of 2026. There are better dividend stocks than Algonquin’s 4.4% yield, such as CT REIT’s 5.3% yield with 3% dividend growth. If you are looking for a turnaround stock, there are better alternatives, like Constellation Software.

The post Up 3.7% After Earnings, Is Algonquin a Good Stock to Buy Now? appeared first on The Motley Fool Canada.

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The Motley Fool has positions in and recommends Constellation Software. The Motley Fool recommends Fortis. The Motley Fool has a disclosure policy. Fool contributor Puja Tayal has no position in any of the stocks mentioned.

At first glance, Enbridge’s (TSX:ENB) stock’s 5.4% dividend yield offering appears to paint it as a better dividend stock to buy right now for passive income, especially when compared to energy sector giant Canadian Natural Resources’s (TSX:CNQ) 3.8% offering. However, the investment decision may not be that simple for income-oriented investors looking to buy and hold a superior Canadian dividend stock over the next five years and beyond.

While past performance isn’t indicative of future returns, CNQ stock’s massive 316% total return, which included substantially raised dividends, leaves Enbridge stock’s 97.9% comparable return too far behind.

In hindsight, CNQ stock has outperformed ENB because oil prices surged, and acquisitions have been accretive to earnings growth. But oil prices will still remain volatile into the next five or more years, and the acquisitions-led growth strategy remains very much alive. This complicates investment decisions for sure.

If you are deploying fresh capital today, which stock between ENB and CNQ offers the better risk-reward profile over the next five years? Let’s break down the numbers.

Cash flow visibility vs. explosive dividend growth

Enbridge stock has experienced a roughly 10% drawdown over the past month, creating an intriguing investment opportunity for passive income seekers. Because Enbridge operates primarily as a midstream pipeline operator and gas utility, over 98% of its adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) is backed by long-term, fee-for-service contracts or low-risk regulation. This gives Enbridge exceptional earnings and cash flow visibility – shielding its 5.4% dividend payout from volatile crude oil prices.

Canadian Natural Resources, on the other hand, is Canada’s premier oil and gas producer. While exposed to global commodity price swings, its long-life, low-decline assets allow it to generate massive free cash flow even during moderate price environments. Powered by this relatively “all-weather” cash flow engine, CNQ stock has grown its dividend at a far faster pace over the past five years (boasting a 22% compound annual growth rate) compared to Enbridge’s steady 3% annual hikes.

Valuation matters

When looking under the hood at valuation, the contrast between ENB stock and CNQ stock is stark.

Enbridge trades at a forward Enterprise Value-to-EBITDA (EV/EBITDA) ratio of 13.1 and a Price-to-Free Cash Flow (P/FCF) multiple of 34. This makes the pipelines giant more expensive to buy for passive income compared to Canadian Natural Resources stock, which trades at a forward EV/EBITDA of just 6.9 and a P/FCF of 11.1.

CNQ stock is dramatically cheaper to buy right now. Low valuations reflects currently elevated oil prices during the Iran war, and investors are discounting next-year earnings and cash flow expecting oil prices to stabilize lower after the disruptive conflict.

While utility-like cash flow stability adds valuation premiums on Enbridge as it embarks on renewable energy projects, CNQ’s low valuation provides a wider margin of safety and significantly greater capital appreciation potential if global oil demand and oil prices remain firm.

Key risks and opportunities to consider

Enbridge’s steady cash flow base enables management to embark on successful five-year investment budgets. The same visibility extends to ENB’s dividends. The company’s high exposure to growing North American gas demand enhances its cash flow growth potential while its legacy pipelines, including the Mainline system, remain critical infrastructure for the entire Canadian oil industry.

That said, Enbridge’s substantial debt load makes the stock more sensitive to elevated interest rates than CNQ, while its mature asset base limits annual dividend increases to the 3% to 5% range.

Meanwhile, Canadian Natural’s deep inventory of oil assets, low decline rates, and low breakeven points makes the energy stock an industry star as U.S. shale production matures and Canadian export capacity expands. CNQ remains capable of executing above-average dividend raises and material stock repurchases that enhance total shareholder returns. However, it remains vulnerable to deep global oil price downturns.

Which dividend stock to buy?

If your primary goal is maximizing immediate passive income with minimal exposure to commodity price swings, Enbridge stock remains a dependable 5.4%-yielding dividend stock to buy for higher passive income.

Investors focused on total return over the next five years may get better gains in Canadian Natural Resources stock. CNQ’s deeply discounted valuation, commitment to returning free cash flow to shareholders, and an established track record of rapid dividend raises during oil rallies give it a distinct edge for compounding wealth over time – if oil prices cooperate.

The post CNQ or Enbridge? Here’s the Better Dividend Stock Right Now appeared first on The Motley Fool Canada.

More reading

• Enbridge vs. Telus: Which Is the Better Dividend Stock to Own Through 2030?
• 2 Dividend Stocks to Hold in a TFSA for 20 Years
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• 3 Dividend Stocks Built to Keep Paying Through Any Market Condition
• 3 TFSA Habits That Work While Saving But Backfire in Retirement

Fool contributor Brian Paradza has no position in any of the stocks mentioned. The Motley Fool recommends Canadian Natural Resources and Enbridge. The Motley Fool has a disclosure policy.

Market uncertainty and the artificial intelligence (AI) revolution taught us that some legacy dividend stocks can also pause dividend growth. The only constant is change, and adapting to this change can revive growth. In the last two years, several renewable energy stocks and two telecom giants slashed dividends, while oil and gas stocks saw a dividend recovery.

Three Canadian stocks that keep raising dividends

In each of these scenarios, some Canadian stocks kept raising their dividends without stressing their cash flows. Do they still have the potential to grow dividends in the future? Let’s see.

Canadian Natural Resources

Canada is an energy export economy. Thus, it comes as no surprise that Canadian Natural Resources (TSX:CNQ), which owns the country’s largest private oil sands reserves, is among the dividend knights. It is among the biggest beneficiaries of rising global energy prices.

The company reported record quarterly production output and revenue in the second quarter of 2026. It used $6.9 billion in funds from operations to reduce debt by $1.6 billion, $2.4 billion on capital expenditure, and another $2.4 billion on dividends and share buybacks.

Canadian Natural Resources uses technology upgrades and economies of scale to reduce production costs. During the energy upcycle, it acquired several reserves and used revenue from increased output to accelerate debt repayment from $15.9 billion in December 2025 to $14.5 billion in June 2026. It aims to reduce it to the targeted $13 billion. Once it achieves this target, the company will use 100% of free cash flow on direct shareholder returns.

Canadian Natural Resources calculates free cash flow after deducting dividends and capex, which means the entire FCF is used for share buybacks. By incorporating dividends into the breakeven price, Canadian Natural Resources protects dividends from oil price fluctuations. Moreover, it has a higher mix of high-margin products, Synthetic Crude and Natural Gas Liquids, which helps it stay profitable even in a cyclical downturn. This business model has helped it grow dividends for 26 consecutive years, even during a supply glut.

Enbridge

Enbridge (TSX:ENB) is another stock that has been raising its dividends for 31 years in a row. However, its dividend growth rate has slowed from 10% to 3% since the pandemic. Behind this slow growth is a change in Enbridge’s strategy from expanding oil pipelines to natural gas pipelines. Enbridge’s pipelines are a lifeline of Canadian oil exports. Now that the North American liquefied natural gas (LNG) export opportunity has arisen, Enbridge is pursuing that opportunity. This has shifted cash flow towards capital expenditure and acquisitions.

The next two years are crucial for the company as a significant number of LNG projects under development are scheduled to come online by 2028. A project under development means more working capital and higher debt levels. Once these projects start earning cash flow, working capital and debt reduce, leaving more cash for dividends.

Enbridge expects to grow its dividends by 5% from 2027 onwards. This growth rate could increase in the long term as debt recedes. Its projects have a long lifecycle, which means once these projects are fully paid off, project cash flow only has to cover maintenance, dividends, and future capital projects.

Manulife Financial stock

Manulife Financial (TSX:MFC) is a stock to own for the 10% average annual dividend growth rate it has maintained for the last 13 years. It doesn’t have a strong history like the above energy stocks because Manulife, like all financial companies, suffered a blow from the 2008 Global Financial Crisis. However, it kept the annual dividend unchanged from 2010 to 2013 before growing it in 2014.

Manulife is funding its dividend growth from increasing core earnings. It is expanding its operations in Asia, growing new business organically and through acquisitions. Some of the new business premiums will trickle down to core earnings if the risk term passes without claim incidents. Even from this core earnings, Manulife maintains a payout ratio of 35–45%, giving it ample flexibility to sustain current dividends and grow them if core earnings grow.

However, Manulife’s dividend growth rate could slow or even pause if the new business growth stagnates. It can grow dividends until then.

The post These 3 Canadian Stocks Just Keep Raising Their Dividends appeared first on The Motley Fool Canada.

More reading

• Enbridge vs. Telus: Which Is the Better Dividend Stock to Own Through 2030?
• 2 Dividend Stocks to Hold in a TFSA for 20 Years
• If Your GIC Is Maturing This Year, Don’t Wait to Build the Next Income Stream
• 3 Dividend Stocks Built to Keep Paying Through Any Market Condition
• 3 TFSA Habits That Work While Saving But Backfire in Retirement

Fool contributor Puja Tayal has no position in any of the stocks mentioned. The Motley Fool recommends Canadian Natural Resources and Enbridge. The Motley Fool has a disclosure policy.

A 14% dip in August has shocked many investors and relieved many. This TSX stock is Telus Corporation (TSX:T). The fall came as the telco reported a net loss of $1.8 billion due to a $2.1 billion goodwill impairment of TELUS Digital’s cash-generating unit. Net loss was the least of investors’ concerns as it was a one-time event. What relieved most investors was Telus announcing dividend cuts and prioritizing debt repayment.

T stock has a $21 billion market cap and over $30 billion long-term debt. Such high debt has reduced Telus’s capacity to fund higher capital expenditure and dividends. Telus is still a good business with strong fixed assets that generate sufficient cash flow. However, the 2022–23 interest rate hikes have slowed its growth pace. It is now paying $1.3 billion in annual interest, which equates to 27% of its operating cash flow. Remember, it takes a year or two for interest rates to reflect in income statements.

Just as one needs to reduce load for a car to run efficiently, Telus needs to reduce its debt to bring back efficiency and accelerate growth.

Why I’m still watching this TSX stock

Telus has got a new CEO, Victor Dodig. His early interaction in the second-quarter earnings call shows debt repayment is the priority. Whether or not Dodig can turn around Telus has me curious.

Back in 2021, Bombardier caught my attention when it decided to sell its train-making business to Alstom. Offloading loss-making businesses, streamlining operations, and focusing on segments that it can handle and grow comfortably was the strategy of then-new CEO Eric Martel, who took the helm in April 2020. Bombardier’s debt situation was way worse than Telus’. The business jet maker was on the verge of bankruptcy. Telus is only seeing slow growth amidst price competition and transition to artificial intelligence (AI).

Telus’s new CEO does not seem to shy away from making difficult decisions. He slashed dividends by 55% and postponed the end of the 2% dividend reinvestment plan (DRIP) discount to October 1, 2026, from the end of 2028. This will bring $2.7 billion in cash savings over the next three years, which he plans to use in debt repayment. Hoping the management does not have a change of mind midway and uses the cash savings elsewhere, Telus could see a turnaround.

How much debt reduction will make a difference in Telus’s balance sheet?

Telus has a 4.8% weighted average interest rate on long-term debt, which means for every $1 billion in debt reduction, it can save on average $47.5 million in interest expense. If Telus wants to achieve the 3 times net debt to adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) target by 2028, it has to reduce debt by at least $3.2 billion.

Calculation: In 2025, Telus’s adjusted EBITDA was $7.4 billion, and it guided a 2–4% dip in 2026. Hence, I assumed a 4% dip in 2026 followed by a 2% growth in 2027 and 2028. Net debt has to fall to $22 billion from the current $25.2 billion to achieve a 3 times leverage ratio.

A $3.1 billion debt reduction will bring annual interest savings of $147.3 million, leaving more cash for capital expenditure and dividends.

How Telus plans to reduce debt this time

Victor Dodig is considering selling Telus Health and Agriculture. However, his words were vague. “Our goal is to continue to nurture the value in those businesses and focus on those that we believe should be monetized because they’re better off in the hands of another owner and do that in a thoughtful manner, thoughtful meaning taking our time — we are engaged”, said Dodig at the second-quarter 2026 earnings call.

His other priorities are increasing revenue from Telus’ wireless business and allocating capital towards customer base management. He has not ruled out AI investments and will complete sovereign AI data centres in Rimouski and Kenwood.

Investor takeaway

If you have patient capital to wait for a turnaround, Telus might be a good investment as it will see more dips in the short term before rallying significantly.

The post Why I’m Still Watching This TSX Stock After Its 14% Drop appeared first on The Motley Fool Canada.

More reading

• Enbridge vs. Telus: Which Is the Better Dividend Stock to Own Through 2030?
• Got $1,000? I’d Buy These 2 Dividend Stocks Before the Next TSX Rally
• Here’s What’s Really Happening With Telus’s Dividend
• Here’s My Plan for Turning $14,000 Into Lifelong TFSA Income
• TFSA Income: 2 High-Yield Stocks to Consider Today

Fool contributor Puja Tayal has no position in any of the stocks mentioned. The Motley Fool recommends Alstom and TELUS. The Motley Fool has a disclosure policy.

Stocks are often categorised as income or growth, depending on the way they provide returns to shareholders. Each stock type has specific traits:

• Income stocks have a regular source of cash flow, which they distribute as dividends.
• Growth stocks are riskier as they seek revenue growth, which may not be in their control.
• Hybrid stocks give dividend growth and/or capital appreciation with regular dividends.

Depending on your financial goals, you can choose a TSX stock.

TSX stocks if you are chasing income

When we speak of income stocks, mortgage lenders, real estate companies, utility and energy companies are the preferred choice.

Slate Grocery REIT (TSX:SGR.UN) is a perfect stock with its annual dividend yield of 7.4%. It has 115 properties in 23 US states, 46% of which are rented to grocers. It earns over 18% rent from Kroger and Walmart and is looking to monetize the real estate needs of omnichannel distribution. E-commerce is not replacing retail but building a new segment by meeting real estate market needs – warehouse and pickup stores.

Slate Grocery’s 93.6% occupancy rate gives ample room to grow rental income. Moreover, a 4.4-year weighted-average lease term gives assurance of regular rental income with scope for renewals at higher rent. A $10,000 investment in Slate Grocery REIT can start earning you $732 in annual passive income.

TSX stocks if you are chasing growth

Celestica (TSX:CLS) is a good stock to buy if you want to chase growth. It became a poster stock in the artificial intelligence (AI) infrastructure growth spree, surging 1,980% between July 2023 and May 2026, triggered by Ethernet Switches for cloud and AI data centres. AI stocks saw a sharp correction in June as companies grew cautious about their AI tokenization costs. This saw Celestica stock correct 22%.

But there is growth beyond Ethernet switches for Celestica. The next revenue growth is coming from the high-margin Enterprise segment catering to AI compute and hyperscalers. It seems like revenue from manufacturing Google’s tensor processing unit is finally flowing in. Celestica even revised its 2026 guidance, and this time the earnings are growing faster than revenue.

This growth justifies the 28 times forward price-to-earnings ratio. Celestica is looking to raise US$3 billion in equity financing for working capital and capacity building to meet long-term demand from hyperscalers. This dilution could pull the stock down, but it has the potential to double your money in the next five years.

Hybrid TSX stocks

Dividend growth

If you seek a lower-risk growth stock with assured payouts, you could consider Canadian Natural Resources (TSX:CNQ). Although the energy stock has a lower yield of 3.8%, it has a 26-year dividend growth history, growing dividends between 2% and 50%. The company incorporates dividends into its breakeven price and deducts them from funds from operations before allocating cash for capital expenditures. This ensures your dividend is safe.

Canadian Natural Resources grows its funds from operations by reducing debt, increasing the mix of high-margin Synthetic crude and light crude when WTI prices are down. CNQ stock grew its dividend by 6.4% in 2026 as its debt level surged to $16 billion, above its $13 billion target. However, it has accelerated debt repayment and reduced it to $14.5 billion by June 2026. Once it reduces the debt to the target range, it will allocate all free cash flow towards share buybacks.

A lower share count will help CNQ increase dividend growth in the long term even if oil prices fall.

Growth with dividends

If you want to generate wealth but need regular payouts to stay invested, Royal Bank of Canada is the ideal stock. RB stock offers 20% average annual capital appreciation in its share price as its mortgage portfolio and value of assets under management increase. It provides regular quarterly dividends, growing them in 23 of the last 26 years.

The post Chasing Income and Growth? Here Are the TSX Stocks I’d Buy appeared first on The Motley Fool Canada.

More reading

• Why I Think Now Is the Moment to Invest in Infrastructure
• 3 Dividend Stocks Built to Keep Paying Through Any Market Condition
• 3 of the Best Canadian Stocks to Buy and Hold in a TFSA
• Celestica by the Numbers: 62% Revenue Growth and Real Strong Margins
• I Keep Passing on Enbridge for This Dividend Stock Instead

The Motley Fool recommends Alphabet, Canadian Natural Resources, Celestica, Kroger, Slate Grocery REIT, and Walmart. The Motley Fool has a disclosure policy. Fool contributor Puja Tayal has no position in any of the stocks mentioned.

While investing in stocks comes with risks, there are some low-risk dividend stocks that you can trust to pay you in every market. The key is to find a low-risk business model and a company that has an economic moat. The next thing to look for is a robust capital allocation and risk management strategy. Filtering stocks on these parameters, here are five dividend stocks from different sectors for diversified cash inflow.

Two dividend stocks from the energy sector

Most dividend stocks grow when the economy is growing. However, these energy stocks help you hedge against inflation. The primary cause of inflation is mostly rising food and energy prices, and energy stocks earn windfall gains when energy prices rise, which they pass on as special dividends.

Enbridge

Dominating North America’s energy landscape is pipeline stock Enbridge (TSX:ENB). Its economic moat is the oil pipeline infrastructure, which is the lifeline for Canada’s oil exports to the United States. It is now building a natural gas pipeline network, but this time not just to export to America but to other countries.

Enbridge is working on its strength of timely completion of pipeline projects within budget. It has allocated $40 billion in capital in new projects, the majority of which are expected to come online by 2028. These projects have pushed its debt above $105 billion, but it is also earning over $12 billion in operating cash flow, sufficient to service debt, invest in the business, and pay dividends.

The energy infrastructure stock has a 5.4% dividend yield, which could increase to 5.7% if the company increases its 2027 dividend per share by 5% to $4.07 from $3.88 in 2026. Although the stock is trading near its 52-week high, its 30-year dividend growth trajectory makes it a must-have if assured payouts are what you seek.

Canadian Natural Resources

Another assurance of dividend payout comes from Canadian Natural Resources (TSX:CNQ), which has embedded the dividend amount in its breakeven price of mid-$40/barrel. Owning Canada’s largest private oil sands reserves, Canadian Natural Resources has a 25-year dividend growth history.

The management has financial discipline to keep net debt below $13 billion. If the debt is higher than the target range, it allocates more free cash flow (FCF) to debt repayment. It is currently on an accelerated paydown of debt from $16.6 billion in December 2025 to $14.5 billion in June 2026.

Once the $13 billion target is achieved, it will allocate 100% of FCF to dividend payments and share buybacks. The stock has a yield of 3.9% but can grow dividends in the high-single-digit to double-digit range in the years to come.

Two dividend stocks from the real estate sector

REITs are some of the best dividend payers as their Trust structure requires them to distribute maximum rental income to unitholders. This makes SmartCentres REIT (TSX:SRU.UN) an ideal REIT because of its long-term lease with Walmart. Of its 201 properties, most of them retail, 24 are under development. Considering that 98.1% of its existing properties are occupied and fetch it regular rent, the new developments could increase its rental income.

The REIT has one of the longest dividend-paying tenures of 22 years without a dividend cut. Although its payout ratio hovers above 85% and leverage is high, most of the debt is paid off when it sells residential units. The ongoing developments will keep working capital high, but they will start paying for themselves as projects come online. Now is a good time to buy the stock and lock in a 6.4% yield.

While SmartCentres has too many projects under development, CT REIT (CRT.UN) has a more efficient balance sheet and a 72.5% payout ratio. It has over 99% occupancy, and its developments, intensifications, and acquisitions are for Canadian Tire. This ensures every new property adds rental income. The REIT can get you a 5.3% yield.

One dividend stock from banking

Royal Bank of Canada is a must-add if you seek safe dividend payouts. During a low-interest-rate environment, wealth management services generate better income, whereas the mortgage segment does so in a high-interest-rate environment. With over 100 years serving the banking business, it has built strong risk management and financial discipline, which makes its dividends safer.

The post 5 Dividend Stocks I’d Trust to Keep Paying Me, No Matter What  appeared first on The Motley Fool Canada.

More reading

• Enbridge vs. Telus: Which Is the Better Dividend Stock to Own Through 2030?
• 2 Dividend Stocks to Hold in a TFSA for 20 Years
• If Your GIC Is Maturing This Year, Don’t Wait to Build the Next Income Stream
• 3 Dividend Stocks Built to Keep Paying Through Any Market Condition
• This 6.6% Dividend Stock Sends You Cash Every Month

The Motley Fool recommends Canadian Natural Resources, Enbridge, SmartCentres Real Estate Investment Trust, and Walmart. The Motley Fool has a disclosure policy. Fool contributor Puja Tayal has no position in any of the stocks mentioned.

The post-pandemic world made investors in gold, semiconductors, and oil stocks millionaires over the last four years. However, those who invested in telecom and software stocks suffered losses or have barely made a profit. This market cycle shows that every growth spurt is not the same for all stocks. What has passed is history, and it may not define the next five-year growth cycle. However, it has left behind traces of the next growth cycle.

Five Canadian stocks to hold for the next five years

The next five years could open a new chapter for Canada’s growth as it accelerates nation-building activities, building energy corridors, sovereign artificial intelligence (AI) infrastructure, and new export markets. The efforts are visible in the order books and capital expenditures. Here are five Canadian stocks worth holding on to for the next five years.

Descartes Systems

Descartes Systems’ (TSX:DSG) share price tanked after the US announced tariffs for all its export partners. After a 45% dip since January 2025, the stock is gearing up for a recovery rally. When the global trade momentum slowed amidst a tariff war, Descartes focused on

• growing revenue through acquisitions,
• increasing the adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) margin by cutting costs, and
• increasing earnings per share (EPS) through share buybacks.

It kept preserving cash to fund other all-cash acquisitions. Improving fundamentals and a share price dip corrected its valuation to a 40 times price-to-earnings (P/E) ratio from 64 times in 2025. Considering the 34% EPS growth, the stock price shows reasonable growth expectations. Any EPS growth from here could support share price growth. The next five years could see a recovery in its share price to $160 and above, representing a 44% upside.

Bombardier stock

Bombardier (TSX:BBD.B) stock might look overvalued at its 26 times P/E ratio, but if you see its 30–50% EPS growth trajectory in the last two years, the valuation is still cheap. The year 2026 will be exceptionally strong for Bombardier as its $21.8 billion order book has a greater mix of high-margin Global 8000 aircraft. Moreover, Bombardier is using its years of losses as income tax recovery to boost EPS.

It has set its growth roadmap to 2030, focusing on the defence sector, pre-owned aircraft, and Global 8000. In the meantime, it will use the excess cash to repay debt, buy back shares, and grow through acquisitions and partnerships. All these efforts could continue to drive Bombardier stock into high-double-digit growth.

Bird Construction

After surging 936% since 2022, Bird Construction (TSX:BDT) might look overvalued. But it is just beginning to execute nation-building infrastructure projects. It is the construction partner for some of the large capital projects, like Woodfibre LNG plant, BCE’s AI data centre in Saskatchewan, and a nuclear power plant. Bird’s order book has surged 70% in two years to $11.1 billion.

Bird Construction’s share price is falling as the company sees execution pressure. However, the next two years could see the commissioning of two major projects, converting order book to revenue and profits. While growth may remain tepid in the short term, it could surge as projects get commissioned and new projects join the backlog.

Two high-risk, high-growth stocks worth owning now

The above stocks are viable businesses where EPS is a good performance measure. Here are two emerging technology stocks representing technology offerings with significant revenue growth potential.

Ballard Power Systems (TSX:BLDP) has manufactured a commercially viable hydrogen fuel cell technology for commercial vehicles, like buses, trucks, trains, marine, and stationary power. It achieved a positive gross margin of 5% in 2025 and has sustained it at 17% in the first half of 2026.

Ballard has appointed a professional management team to help it improve efficiency and generate profits. If the adoption of hydrogen fuel cell technology picks up, Ballard stock could surge 400–800%. The next five years are crucial for this stock.

Hive Digital Technologies (TSX:HIVE) is tapping the AI data centre wave using its expertise in building graphics processing unit (GPU)-powered data centres. It is working on BCE’s AI fabric and seeking a hyperscaler client. If it succeeds in getting one, the stock could skyrocket.

The post I’m Holding These 5 Canadian Stocks for at Least the Next 5 Years appeared first on The Motley Fool Canada.

More reading

• I’m Using These 2 Canadian Stocks as My TFSA Cornerstones
• Why I Think Now Is the Moment to Invest in Infrastructure
• What Are the Best High-Growth Canadian Stocks to Buy Now?
• Here Are 2 TSX Stocks I’d Use to Supercharge My TFSA
• These Are the Canadian Stocks I’d Trust in My TFSA for Life

Fool contributor Puja Tayal has no position in any of the stocks mentioned. The Motley Fool recommends Descartes Systems Group. The Motley Fool has a disclosure policy.