Best Canadian dividend stocks 2023

Top 10 Best Canadian dividend stocks 2023

In this article, we will present the best canadian dividend stocks 2023. We focused in our analysis on large caps that have increased significantly their dividends in the past 5 years. In addition, for each company selected, the dividend yield and the dividend payout ratio and other pertinent ratios will be provided.

A quick review of the methodology:

  • Minimum dividend yield of 2.5%
  • Companies with the highest incease in their paid dividends in the past 5 years (Minimum = 10%)
  • Large Cap only with minimum of 10B market cap
Name5Y Div%
POW-PR-E.TO Power Corp Part Pr42.63%
ABX.TO Barrick Gold Corp35.10%
AEM.TO Agnico Eagle Mines Ltd31.21%
QSP-UN.TO Restaurant Brands Intl Ltd Partnership27.88%
QSR.TO Restaurant Brands International Inc27.88%
CCL-A.TO Ccl Industries Inc Cl A16.31%
CNQ.TO Canadian Natural Resources Ltd.16.27%
CCL-B.TO Ccl Industries Inc Cl B NV16.00%
CTC.TO and CTC-A.TO Canadian Tire Corp Ltd15.37%
Source: Barchart – 5Y Div%: 5 years dividend growth

Investing in dividend-paying stocks

Investing in dividend paying stocks is a strategy that appeals to young and old investors. Here is a quick reminder of the main concepts to keep in mind before applying this strategy:

Investment horizon: 5 years or more minimum. The strategy of investing in dividend paying stocks is not suitable for an investor with a short term horizon (less than 5 years).

Objective: The strategy can help you build passive income or further grow your capital by reinvesting the dividends received.

Risk Tolerance: Medium (provided you restrict yourself to selecting quality securities and having a diversified portfolio across several sectors).

What’s a good payout ratio?

The dividend payout ratio is the amount of dividend distributed by a company divided by the total earnings. For example, a company makes a profit of $ 100 and pays $ 40 in dividends. Its payout ratio is 40%.

If the ratio is high, the company pays almost all of its profits in dividends. There will be little money left in the coffers to innovate or expand to new markets;

It is preferable to invest in a company where the dividend payout ratio is low or medium. The reasoning is that these companies will have money set aside to invest in new projects and thus create growth;

Another variation of payout ratio (Trailing div / Earnings) is the payout ratio to cash (Div / Free cash flows). Earnings can be easily manipulated, so analysts use the payout ratio to cash to assess the safety of dividends better. The website ‘Marketbeat‘ provides the payout ratio to cash for Canadian stocks.

Why stocks price decrease after dividend payments?

In the short term, the payment of dividends constitutes a drain on the company’s financial resources. At the time they are distributed, the share price will decrease accordingly in normal trading conditions. This is why some companies allow shareholders to reinvest their dividend by acquiring more shares.

In the long term, the relationship between dividend and share price is more complex.

On the one hand, the payment of dividends attracts new shareholders and retains the current ones. This has a positive effect on the share price overall. But on the other hand, an excessive levy on the resources of the company can hinder he compay’s growth prospects.

POW-PE.TO Power Corp Part Pr

ABX.TO Barrick Gold Corp

AEM.TO Agnico Eagle Mines Ltd

QSP-UN.TO Restaurant Brands Intl Ltd Partnership

QSR.TO Restaurant Brands International Inc

CCL-A.TO and CCL-B.TO Ccl Industries Inc Cl A

CNQ.TO Canadian Natural Resources Ltd.

CTC.TO and CTC-A.TO Canadian Tire Corp Ltd