Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Dividend Income Investors: 5 Top Canadian Stocks to Buy Now

Published 2021-07-28, 09:30 a/m
Updated 2021-07-28, 09:45 a/m
Dividend Income Investors: 5 Top Canadian Stocks to Buy Now

Dividend Income Investors: 5 Top Canadian Stocks to Buy Now

Higher-yielding dividend income is harder to find these days. The TSX Index has had a strong rise and Canadian dividend stocks have had a nice recovery out of the pandemic. Unfortunately, that means valuations are fairly stretched and dividend yields have compressed.

Yet when markets are high, the key is to own high-quality businesses. When markets turn, they will be more likely to hold their valuation and recover faster. Considering this, here are five top-quality Canadian stocks to buy now and own for long-term dividend income.

Granite REIT A great example of a solid Canadian stock that quickly recovered out of a crisis is Granite REIT (TSX:GRT.UN). When the COVID-19 pandemic hit last year, its stock only dropped 18%. Yet three months later, it had already recovered its losses and was trading at new highs.

This dividend income stock has a rock-solid balance sheet with one of the lowest leverage ratios in the real estate industry. Likewise, it owns institutional-grade logistics and industrial properties that are contracted to top tenants like Magna International and Amazon (NASDAQ:AMZN). Today, Granite pays a 3.5%, but it has successfully raised that dividend nine years in a row.

Brookfield Infrastructure Partners Brookfield Infrastructure Partners’s (TSX:BIP.UN)(NYSE:BIP) recovery out of the pandemic has been a bit slower than Granite’s. However, it is an equally high-quality dividend income stock to own. It owns and operates essential infrastructure assets across the world. This includes everything from cell towers to HVAC rentals to ports to railroads.

Since its inception in 2008, BIP has produced 15% compounded annual average total returns for investors. It just won an epic battle to acquire Inter Pipeline.

It will now have a large integrated midstream and pipeline network across North America. Today, BIP pays a 3.7% dividend, but investors can expect strong income growth from this acquisition and likely many to follow in the future.

TC Energy: A top dividend-growth income stock Speaking about pipeline infrastructure, you won’t get much better than TC Energy (TSX:TRP)(NYSE:TRP). Certainly, this company has faced some challenges. One of its largest capital projects, Keystone XL, was recently scrapped by the U.S. government.

Yet it still has $20 billion of projects in its growth pipeline. The majority of these are focused on natural gas, which is expected to be a major transition fuel for many years to come.

Since 2000, it has grown its dividend by a compounded annual growth rate of 7%. It pays a 5.7% dividend, but it expects to keep growing that payout by 5-7% for the near future.

TD Bank: A safe dividend income stock A discussion about dividend income would not quite be complete without the inclusion of a Canadian bank. TD Bank (TSX:TD)(NYSE:TD) is a favourite right now. Among peers, it has some of the highest exposure to personal and commercial retail banking. It is a retail leader in Canada, but also in the eastern U.S.

As the pandemic crisis wanes, TD should really benefit from general economic strength and rising interest rates. Likewise, this dividend income stock is very well capitalized with lots of extra cash.

Eventually regulators will allow the Canadian banks to deploy reserves. Investors can likely expect a dividend increase and/or share buybacks. This stock pays a solid 3.8% dividend right now.

Sylogist Sylogist (TSX:SYZ) is perhaps not as well known as the above large-cap stocks. But it is an interesting dividend income stock. It is, in fact, a technology business. It provides crucial enterprise planning and management software for educational institutions, not-for-profits, and charities.

Its solutions are essential to its customer’s operations. Consequently, it garners very high profit margins and stable recurring revenues. While it is not growing as fast as other tech stocks, it generates stable free cash flow yields that enable it to pay an attractive 3.8% dividend.

The company has a new management team, $22 million in cash, and opportunity for acquisition expansion. All in all, it is a great tech stock to own for stable, growing streams of income.

The post Dividend Income Investors: 5 Top Canadian Stocks to Buy Now appeared first on The Motley Fool Canada.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Fool contributor Robin Brown owns shares of Amazon, Brookfield Infrastructure Partners, and GRANITE REAL ESTATE INVESTMENT TRUST. The Motley Fool owns shares of and recommends Amazon. The Motley Fool recommends BROOKFIELD INFRA PARTNERS LP UNITS, Brookfield Infrastructure Partners, GRANITE REAL ESTATE INVESTMENT TRUST, and Magna Int’l and recommends the following options: long January 2022 $1,920 calls on Amazon and short January 2022 $1,940 calls on Amazon.

This Article Was First Published on The Motley Fool

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.