best canadian dividend stocks

Top 10 Best Canadian Dividend Stocks – 2023

In this post, we will be going over the Best Canadian Dividend Stocks Canada (Top 10). We started by reviewing the full list of the Canadian dividend aristocrats with over ten years of consistently increasing dividends. From the list, we picked ten stocks which we think are the best available in Canada right now.

Canadian dividend aristocrats

The list of Canadian ”Dividend Aristocrats” stocks is managed by the firm Standard and Poors. The index is titled the S&P Canadian Dividend Aristocrats. It requires a minimum of 5 years of successive dividend increases, which is low compared to the minimum 25 years for the US version of the index. You can check out our article on America’s Dividend Aristocrats here by sector.

For this post, we will share the list of Canadian “dividend aristocrats” stocks that have increased their dividends for at least ten consecutive years! In addition, we will also pick ten stocks among the ones most recommended by income-seeking bloggers. For each, we will provide financial data and analysis.

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Why invest in dividend aristocrats

If you are asking yourself, what is the typical profile of a dividend aristocrat stock? I have listed some common characteristics below:

Dividend aristocrats tend to dominate their industry

• The vast majority are companies that are well established in their sector. They manage to generate significant profits thanks to their comfortable position against the competition. In some cases, they operate in regulated markets such as electric utilities with almost no competition;

Safe heaven during turbulent times

• “Dividend aristocrats” are sometimes considered by the financial market as safe havens in the event of a market correction or decline. Indeed, dividend aristocrats are generally less volatile than the market, and there are less targeted by speculators;

Strong financial statements

• “Dividend aristocrats” will tend to have a better financial situation in terms of liquidity than the rest of the market. Their levels of liquidity or debt are generally better than the rest of the market;

Limited growth but there are exceptions

• In general, dividend aristocrats are mature businesses. That is, the growth potential is quite limited. However, some companies can pay dividends and invest in their growth. Hence the importance of focusing on the dividend payout ratio.

What is a good dividend 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%.

How to interpret a payout ratio

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.

Total return

When one wishes to invest in a dividend-paying stock, it is essential to pay attention to its performance and growth potential. The most common mistake is to invest in stocks with high dividend yields. This strategy is risky. Here’s why :

• A stock can pay a high dividend yield, but is it sustainable? Some companies have a payout ratio that is close to and even exceeds 100%. They manage to post desirable dividend yields, but if we look at the growth prospects, it’s almost nil;

• Investors sometimes shun companies for lack of growth potential or actual risk of lower revenues in the future. These companies experience a drop in the price of their shares, and this causes the dividend yield to become abnormally high. Sooner or later, these businesses will have to cut their dividend.

Best canadian dividend stocks – full list

The table below lists the Canadian Dividend Aristocrats. Stocks are ranked by the number of successive years of dividend increase. These stocks are considered the best dividend stocks in Canada.

Symbol – NameDGR*
Streak
CU –Canadian Utilities49
FTS -Fortis47
TIH -Toromont Industries31
CWB –Canadian Western Bank29
ACO.X -Atco Ltd27
TRI -Thomson Reuters Corp27
IMO -IMPERIAL OIL26
MRU – Metro Inc26
EMP.A -Empire Company (A)26
ENB.TO – Enbridge25
CNR -Canadian National R.R.25
SAP – Saputo Inc23
TRP – TC Energy20
CNQ -Canadian Natural Rsrcs20
TCL.A -Transcontinental Inc. (A)19
FTT – Finning Int19
CCL.B -CCL Industries (B)19
RBA -Ritchie Bros Auctioneers18
T – Telus17
CCA -Cogeco Cable17
CGO – COGECO Inc16
IFC – Intact Financial16
SJ – Stella-Jones Inc.16
XTC– Exco Technologies15
ADW.A – Andrew Peller15
EMA – Emera Inc14
ENGH – Enghouse Systems14
BYD -Boyd Group Services14
FNV – Franco-Nevada Corp.13
TCS – Tecsys Inc13
BCE – BCE Inc12
NA – National Bank11
MG – Magna Int’l. (A)11
LGT.B – Logistec Corp11
ATD.B –Alimentation
Couche-Tard
11
WCN -Waste Connections11
KEY -Keyera Corp10
EIF -Exchange Income10
CM -CIBC Bank10
BNS -Bank of Nova Scotia10
AQN- Algonquin Power and
Utilities Corp
10
TD – TD Bank10
GRT.UN -Granite Real
Estate Investment Trust
10
RY -Royal Bank10
CTC.A -Canadian Tire
Corp Cl A NV
10
GCG.A -Guardian Capital Gr10
HDI -Hardwoods Distribution10
EQB  -Equitable Group Inc10
TFII -Tfi International Inc10
DOL -Dollarama Inc10
Best dividend stocks Canada

* Number of years of successive dividend increases

The stocks below are the ones most recommended by Canadian bloggers. We present you the relevant financial information with our comments and analysis.

Canadian Utilities stock

Symbol  CU.TO
NameCanadian Utilities Ltd Cl A NV
Market Cap, $K9,412
Div Yield5.04%
YTD performance 12.03%
Perf 3 yrs15.02%
Perf 5 yrs-6.38%
Earnings growth 5 yrs3.53%
Div growth growth 5 yrs8.10%
Beta0.56
Pay-out ratio173.65%
Dividend streak*49 yrs
best canadian dividend stocks

Source: Barchart / * Number of years of dividend increases

Canadian Utilities Limited and its subsidiaries are engaged in the electricity, natural gas, and retail energy industries. Canadian Utilities has increased its dividends continuously for 49 years!

Analysts see weak growth for this stock in the future. One can also question the ability of Canadian utilities to increase their dividends in the future since the pay-out ratio is at 173%. Remember that when interest rates rise, utility companies compete with bonds; conservative investors tend then to drop utilities for bonds, causing a sell-off of utility stocks.

Fortis stock

Symbol  FTS.TO
NameFortis Inc
Market Cap, $K26,595
Div Yield3.79%
YTD performance8.38%
Perf 3 yrs32.46%
Perf 5 yrs31.96%
Earnings growth 5 yrs0.08%
Div growth growth 5 yrs6.79%
Beta0.07
Pay-out ratio75.62%
Dividend streak*47 yrs
best canadian dividend stocks

Source: Barchart / * Number of years of dividend increases

Fortis Inc. operates as an electric and gas utility company in Canada, the United States, and the Caribbean countries.

Analysts recommend Fortis for anyone looking for stable and predictable dividend income. Fortis has increased its dividends for 47 consecutive years. The company serves more than 2.2 million electricity customers and 1.1 million gas utility customers. Fortis offers a good dividend yield and a decent dividend growth rate (6.79% over the last five years).

In an effort to boost growth, Fortis is diversifying its portfolio assets to include clean energy and renewable energy sources.

Toromont industries stock

Symbol  TIH.TO
NameToromont Ind
Market Cap, $K9,105
Div Yield1.27%
YTD performance24.84%
Perf 3 yrs72.86%
Perf 5 yrs171.92%
Earnings growth 5 yrs10.69%
Div growth growth 5 yrs12.77%
Beta0.67
Pay-out ratio35.39%
Dividend streak*31 yrs
best canadian dividend stocks

Source: Barchart / * Number of years of dividend increases

Toromont Industries Ltd. supplies specialized capital goods in Canada, the United States, and abroad. It operates in two segments, Equipment Group and CIMCO. The Equipment Group segment is engaged in the sale, rental, and maintenance of mobile equipment. The CIMCO segment is involved in the design, engineering, manufacture, installation, and aftermarket support of refrigeration systems in the industrial and recreational markets.

Toromont is a well managed company that frequently beats market estimates. This stock is perfect if you want to have a combination of dividend income and growth potential. It’s a long-term buy.

The company has continuously increased its dividends for over 31 years. Over the past five years, the dividend has increased by 13%.

Enbridge stock

Symbol  ENB.TO
NameEnbridge Inc
Market Cap, $K106,798
Div Yield6.34%
YTD performance29.80%
Perf 3 yrs22.95%
Perf 5 yrs-10.28%
Earnings growth 5 yrsN/A
Div growth growth 5 yrs11.74%
Beta0.9
Pay-out ratio147.51%
Dividend streak*25 yrs
best canadian dividend stocks

Source: Barchart / * Number of years of dividend increases

Enbridge is responsible for transporting a quarter of the oil produced in North America through its extensive pipeline system. The company also transports one-fifth of the natural gas used in the United States.

Enbridge is often part of the best dividend stocks in Canada. And for a good reason! Despite a high dividend rate and sometimes bad economic conditions, the company has never reduced its dividends and continues to increase them.

Analysts agree on the low growth potential for ENB. However, Enbridge remains a business with stable income stemming from an existing pipeline system.

Canadian National Railway stock

Symbol  CNR.TO
NameCanadian National
Railways
Market Cap, $K107,529
Div Yield1.62%
YTD performance9.28%
Perf 3 yrs36.52%
Perf 5 yrs73.52%
Earnings growth 5 yrs2.64%
Div growth growth 5 yrs12.97%
Beta0.57
Pay-out ratio42.20%
Dividend streak*25 yrs
best canadian dividend stocks

Source: Barchart / * Number of years of dividend increases

The Canadian National Railway Company is active in the rail and related transportation industry. The company operates a 19,500-mile road network spanning Canada and the United States. Among other things, it transports petroleum and chemicals, grains and fertilizers, coal, metals and minerals, and forest products.

Canadian National Railway has diversified revenues across several product lines. Although the rate of return is low at 1.62%, the company is recording an exciting dividend growth rate of 13% over five years.

Telus stock

Symbol  T.TO
NameTelus Corp
Market Cap, $K38,054
Div Yield4.52%
YTD performance10.51%
Perf 3 yrs22.39%
Perf 5 yrs30.29%
Earnings growth 5 yrs-3.87%
Div growth growth 5 yrs7.12%
Beta0.53
Pay-out ratio131.96%
Dividend streak*17 yrs
best canadian dividend stocks

Source: Barchart / * Number of years of dividend increases

Telus provides a range of telecommunications products and services, including wireless and wired voice and data. The company has approximately 11 million subscribers.

T.TO has been increasing its dividends for 17 years now.

The pandemic has reduced the company’s revenue, mainly the profits made on the “Roaming” calls/data used while traveling. The dividend payout ratio is worrying at 132%. It’s worth noting, the payout ratio to cash is 76%. The latter is considered a better measure of the sustainability of the dividends.

National Bank stock

Symbol  NA.TO
NameNational Bank
of Canada
Market Cap, $K34,383
Div Yield2.79%
YTD performance43.20%
Perf 3 yrs66.91%
Perf 5 yrs117.72%
Earnings growth 5 yrs4.79%
Div growth growth 5 yrs6.84%
Beta1.13
Pay-out ratio34.91%
Dividend streak*11 yrs
best canadian dividend stocks

Source: Barchart / * Number of years of dividend increases

National Bank is the sixth-largest bank in Canada. It has a strong presence in Quebec.

NA was the best-performing stock this year among banking stocks. The company has a dividend rate of return of 2.79% with good growth potential. Dividends have grown by almost 7% over the past five years.

National Bank is recognized for its dynamism and continues to grow outside Quebec.

TD Bank stock

Symbol  TD.TO
NameToronto-Dominion
Bank
Market Cap, $K158,358
Div Yield3.63%
YTD performance21.50%
Perf 3 yrs17.52%
Perf 5 yrs45.02%
Earnings growth 5 yrs8.84%
Div growth growth 5 yrs9.23%
Beta0.89
Pay-out ratio37.25%
Dividend streak*10 yrs

Source: Barchart / * Number of years of dividend increases

TD Bank is one of the largest Canadian banks. The dividend rate of return stands at 3.63%, with impressive growth over the last five years at around 9%.

The company has increased its dividends every year for the past ten years now. The banking sector has shown a substantial rise since the almost normal recovery of economic activity in North America.

Algonquin Power And Utilities stock

Symbol  AQN.TO
NameAlgonquin Power
and Utilities Corp
Market Cap, $K11,524
Div Yield4.65%
YTD performance-11.46%
Perf 3 yrs40.14%
Perf 5 yrs58.65%
Earnings growth 5 yrs35.25%
Div growth growth 5 yrs10.01%
Beta0.17
Pay-out ratio46.45%
Dividend streak*10 yrs

Source: Barchart / * Number of years of dividend increases

AQN is very well managed and has one of the strongest growth profiles in the industry. The valuation is attractive. Investors faced with the risk of rising interest rates are beginning to lose interest in companies that provide regulated public services.

Alimentation Couche-Tard stock

Symbol  ATD-B.TO
NameAlimentation
Couche-Tard Inc
Market Cap, $K51,092
Div Yield0.73%
YTD performance10.86%
Perf 3 yrs55.50%
Perf 5 yrs41.52%
Earnings growth 5 yrs18.48%
Div growth growth 5 yrs21.03%
Beta0.97
Pay-out ratio 
Dividend streak*11 yrs

Dividend growth is exciting at 21%. The rate of return is relatively low at 0.73%. Couche-Tard is a company that aims for long-term growth mainly through acquisitions, and the potential is there. Less than 25% of convenience stores in North America are part of a chain.

Couche-Tard managed to soften the impact of the pandemic with high margins in the petroleum products sales. The increased margin compensated for lower sales. This being said, these margins are not sustainable long term.

EV market is growing and Couche-Tard knows it will hurt its bottom line. The company is already starting to rethink its products mix to adapt to this new trend.