Updated as of May 2019
26. Rogers Communications
25. Enghouse Systems
25. Canadian Pacific Rail
21. Manulife Financial
20. Andrew Peller
19. Sunlife Financial
18. Equitable Group
17. Pembina Pipe
16. GoEasy Limited
15. TFI International
14. Suncor Energy
13. Brookfield Asset Management
12. Atco Gas
10. Bank of Nova Scotia
9. Bank of Montreal
8. CN Rail
Our Top 5
One of the best ways to increase the value of your stock portfolio while protecting it from adverse market movements is to add Canadian dividend stocks that will provide you with income in any market environment. That is why we published this list of the best Canadian dividend stocks for 2019.
Be careful though, stocks that have unusually high dividends need to pay these rich premiums to attract investors and most of the time these dividend companies are unstable. These aren’t exactly the best stocks to buy and hold as their dividend payouts will eventually catch up to them and their share price will start to drop. Therefore it’s prudent to build your dividend producing portfolio with stocks that are not overvalued, and likely to hold up in adverse market conditions.
Looking for growth to pair with your dividends?
Canadian dividend stocks simply hold up in sub-par market conditions
- Management has to be particularly frugal when they are forced to give out a dividend
- Dividend-paying companies tend to have more earnings
- During a market crash, an attractive dividend yield often makes investors keep purchasing dividend stocks, saving the price
There is no doubt dividend stocks have a place in every investor’s portfolio.
These aren’t necessarily the highest paying dividend stocks, but you can run into trouble looking only for high yields. These are simply the best and safest dividend stocks you can own on the TSX today.
Canada’s Top Canadian Dividend Stocks for 2019
#26 — Rogers Communications
Rogers Communication, Inc. is a diversified communication and media company. It is the largest wireless and cable TV provider in Canada reaching out to 95% of the Canadian population.
Rogers commands a 34% telecom subscriber share with 10.6 million wireless subscribers in Canada. Rogers Communication also has 1.8 million television, 2.2 million internet, and 1.1 million phone subscribers. It is known for delivering the fastest internet speed for its customers.
Almost all of Rogers Communication’s business is in Canada. The company has diversified revenue streams comprising of wireless (57% of total revenue), cable (25%), media (15%) and business solutions (3%). More than 90% of total revenues are from services rendered and 8% from equipment sales.
Rogers has a portfolio of media assets that reaches Canadians from coast to coast. Sportsnet, which is one of its TV networks is the number one sports media brand in Canada. The company has the lowest churn rate among postpaid customers.
Rogers owns an extensive network infrastructure consisting of hybrid fibre-coax cable network which is highly scalable. Rogers’ multi-band LTE wireless network coverage reaches ~95% of Canada’s population and its prime 700 MHz spectrum covers 91% of Canada’s population. It’s no wonder the company has a very strong dividend.
A strong balance sheet, a huge sticky subscriber base, extensive network infrastructure and diverse businesses are Rogers Communications’ key competitive advantages.
There exists a scenario of significant growth in data consumption to the extent that the number of connected devices per home is expected to increase to 50 by 2022 from 11 today. Rogers Communication is in a good position to serve this surge in data needs.
Rogers has compounded its dividend by an impressive 37% over the last decade. However, the pace of growth has declined over the recent years, and the company recently raised dividends for the first time in years. Over the past number of years, Rogers Communications has focused on de-leveraging and its payout ratio has been slowing declining. As of writing, it sits at a reasonable 49%.
Rogers Communication has indicated that operating profits should increase in the mid-single digit range. It is reasonable to assume that future dividend growth will be inline with earnings growth.
#25 — Enghouse Systems
There are very few technology stocks that are reliable income plays. What makes them so attractive is they typically offers investors income and growth. Enghouse Systems is no different. In fact, it has the longest dividend growth streak among all tech companies (12 years) and has averaged 20% annual returns over the past five years.
Since we released our Dividend Screener to premium members, Enghouse has been consistently ranked at, or near the top of our dividend list. The divided is safe and growing at a double digit pace. A pace that is not likely to slow anytime soon.
Enghouse has a low payout ration as compared to earnings (29%) and free cash flow (26%). Considering the company is expected to grow at a 10% to 12% clip over the next few years, the dividend is likely to continue its rapid growth.
If that wasn’t enough, Enghouse is also ranked in the top 5 of our Top Technology Stocks list.
#24 — Canadian Pacific Railway
Once a Canadian Dividend Aristocrat, CP Rail entered a rough patch at which point it kept its dividend steady for a number of years. As a result, it lost its status as a dividend growth stock. CP Rail has however, been successful in getting itself back on track!
The company began raising dividends again in 2016 and it now has a four-year dividend growth streak. Over that period, its dividend has more than doubled climbing to $0.83 from $0.35 per share. CP Rail recently raised dividends by 27.8%! Once thing is clear, the company is looking to make up for lost time.
Like others on this list, what the company lacks in yield (0.87%) it makes up in terms of dividend growth and capital appreciation.
#23 — Emera
Dropping way down on our 2019 list of the top Canadian dividend stocks is Emera. Headquartered in Halifax, Emera is one of Canada’s largest diversified utility companies with a market capitalization of $10 billion. As you probably know, utility companies are well known for their high yielding dividends.
Looking for Canadian utilities?
Emera invests in electricity generation, transmission and distribution, gas transmission and distribution, and utility energy services with a strategic focus on the transformation from high carbon to low carbon energy sources. In 2018, Emera posted $1.66 billion in operating cash flow and their dividend is fully covered by its earnings, of which 90% is regulated.
Its current dividend yield of 4.57% is extremely attractive and is almost a full percentage point higher than some of its major competitors such as Fortis and Canadian Utilities. Although not as impressive as their peers as far a dividend growth is concerned, the company still has an impressive 12-year DG streak with average double-digit dividend raises over the past 3 years.
Unfortunately, dividend growth is expected to slow. In August, Emera updated its guidance and anticipates growing dividends by 4-5% through 2021. This is down from 8% previously. As a result it has dropped from 11 to 22 in our list.
#22 — Open Text Corp
Open Text is one of the few dividend growth companies in the technology sector. In 2018, OpenText became a Canadian Dividend Aristocrat having raised dividends for five consecutive years. Open Text operates in the $40 billion enterprise information management market (EIM) where it designs, develops, markets and sells EIM software and solutions.
Looking for tech stocks?
Although it has a low dividend yield, it has one of the highest dividend growth rates among Canadian Aristocrats. Since its dividend streak began, it has consistently raised dividends by approximately 15% annually. At this rate, Open Text will double its dividend in less than five years.
On a forward P/E basis, the company’s payout ratio falls below 20%. An investment in Open Text is appropriate for both growth and dividend investors. Since 2007, it has made over two dozen acquisitions which has propelled annual revenue growth of 14% over the same time period.
#21 — Manulife Financial
Manulife drops to number 21 on our list of the best Canadian dividend stocks.
After years of dividend stagnation, Manulife has once again become a reliable dividend growth company. Manulife raised its dividend twice in 2018. Last February, the company announced a 7% dividend raise and in November, it announced another raise of 14%. It marks the fifth consecutive year of dividend growth. As a result, the company has regained its status as a Canadian Dividend Aristocrat. On a forward P/E basis, the company’s payout ratio is only 32%. Manulife has plenty of room to keep its dividend streak alive.
Once forgotten, insurance companies are making a comeback thanks to rising interest rates. Over the past five years, Manulife has grown core earnings by a compound annual growth rate (CAGR) of 15%. Asia has been a bright spot for Manulife. Asia new business value has grown at a CAGR of 38% since entering the market in 2014.
Manulife’s wealth asset management (WAM) segment has also enjoyed significant growth. WAM assets under management have grown by 20% annually over the past five years and the segment’s earnings have grown by an average of 15% over the same time frame.
As the economy strengthens and interest rates rise, Manulife is well positioned to reward dividend investors.
#20 — Andrew Peller
Andrew Peller produces and markets wine, spirits, and wine related products. If you are worried about its small stature and $720 million market cap, don’t be. It has a long and storied history with roots dating back to 1961.
It’s one of the smallest Canadian Dividend Aristocrats and has proven to be on of the most reliable dividend growth companies in Canada. Its dividend growth rate is on the rise and its more recent dividend raise of 14% is above its three and five-year dividend growth rates.
Over the past five-years, Andrew Peller has grown earnings by a compound annual growth rate of 20%. Although growth is expected to slow to approximately high-single digits over the next couple of years, it doesn’t consider future acquisitions.
Since 1995, Andrew Peller has purchased and integrated 17 brand acquisitions totaling more than $200 million. As it continues to expand in adjacent categories, there is also a real opportunity in the cannabis sector. Although the company has not publicly commented, it has not shied away from expanding its product base in the past, which would only mean good things for its dividend.
#19 — Sun Life Financial
In at number 19 on our list of the best dividend stocks on the TSX is Sun Life Financial.
Sun Life continues to impress us, and you should look for the stock to be a little higher on the list come next update. The insurance giant was previously ranked number 9, but has fallen to superior competition. However, Sunlife still provides a very solid dividend for income investors.
Sun Life Financial is a holding company that has subsidiaries that are active in the financial service space. Through its subsidiaries, Sunlife offers a range of insurance products along with wealth management instruments to individuals and corporations. Head office is in Toronto and had net income of 1.9 billion Canadian dollars in 2018.
Sun Life is a global organization and has operations in Asia, Europe, and North America. Sun Life performs better as interest rates begin to rise. This is because they have a difficult time generating enough revenue to cover insurance policies when interests rates are unusually low. At this time the organization boasts a solid 3.6% dividend yield, making this an attractive addition to your dividend portfolio.
#18 — Equitable Group
Equitable Group is one of the best alternative Mortgage lenders in Canada. It has top notch management and has been growing at a double-digit pace over the past number of years.
The company is also positioning itself as Canada’s Challenger Bank. An entirely digital Schedule I Charter Bank, Equitable is proving itself to be a viable alternative to those who are tiring of the Big Five.
When it comes to the dividend, Equitable has quietly emerged as one of the best dividend growth stocks in the Country. EQ Bank is a Canadian Dividend Aristocrat, with an eight dividend growth streak. The most impressive aspect about its dividend is the frequency at which it’s raised.
The company has raised dividends in three consecutive quarters, and has raised dividends at least twice a year for the past five years. Although its yield (1.64% as of writing) is nothing to get excited about, it would be much higher if not for consistent capital appreciation. This is a great problem to have.
#17 — Pembina Pipeline Corp
Pembina Pipeline stays at number 17 our 2019 list of the top dividend stocks in Canada.
Pembina Pipeline is one of North America’s premier pipeline companies. It is a fully-integrated midstream company with a diversified asset portfolio of crude oil, condensate, NGL and gas. A member of the TSX 60 index, Pembina has high quality assets that has enabled them to return almost $6 billion in dividends to shareholders since 1998. Pembina is a Canadian Dividend Aristocrat having raised dividends for seven consecutive years.
Pembina’s annual dividend of $2.27 per share is well covered by its adjusted cash flow in the mid $3 range.
Pembina has an exceptional record of delivering projects on-time and on budget. Since 2013, Pembina has put into operation 13 significant projects. Of those, not a single one was over budget. In fact, nine of them came in under-budget. Likewise, only two suffered from small delays, while another four were in-service ahead of schedule.
Pembina has an addition $2 billion in projects coming online by 2020. Analysts expects earnings per share to grow by 10% annually over the next five years. Its fee for service model and long-term contracts underpin the safety of the company’s dividend well into the future.
#16 — Goeasy Limited
One of the best Canadian dividend stocks in 2019 is Goeasy Limited.
Goeasy is a full-service provider of goods and alternative financial services. It operates in two segments: easyfinancial and easyhome. Goeasy has quietly become a dividend growth company. A new entry on the dividend list, its 58% anticipated growth rate through 2019 also landed GoEasy on our Top Growth Stocks list.
The company’s dividend has more than doubled since 2014. In March, goEasy raised dividends by 37% marking the fifth consecutive year of dividend growth. As such, it will become a Canadian Dividend Aristocrat in 2020.
Despite the rapid pace of dividend growth, its payout ratio is still sitting at a respectable 34%.
The company’s easyfinancial segment has been fueling the GoEasy’s growth. It recently expanded into Quebec and expanded its loan offerings. Previously, the company was focused on unsecured loans of $500-$15,000. Recently, Goeasy expanded product offerings including unsecured loans of $15,000-$30,000, an $18 billion market.
#15 — TFI International
TFI International is a transportation and logistics company with operations in North America.
The announcement of a tri-lateral agreement between Canada, Mexico and the United-States was welcomed news for the company. It has significant cross-border trading and the deal ensures none of its products will be subject to un-welcomed tariffs.
TFI has a solid eight-year dividend growth streak and as such, is a Canadian Dividend Aristocrat. Unlike many of the Dividend Aristocrats, its dividend growth rate is trending upwards. In October, the company raised its dividend by 14.3%, the highest level of dividend growth since its streak began.
TFI saw a significant spike in its financial performance in 2018. Margins are expanding, and earnings are growing at a triple-digit pace. The best part? Growth is expected to continue. Analysts expect the company will grow earnings by the mid-teens over the next few years.
On the back of increased earnings and cash flows, TFI is an overlooked dividend star in the making.
#14 — Suncor Energy
Suncor Energy is definitely one of the best Canadian dividend stocks to buy and hold for 2019, and actually topped our list of the best oil and gas stocks to buy. Suncor Energy is the fifth largest North American energy company and one of the largest independent energy companies in the world. Suncor’s operations include oil sands development and upgrading, offshore oil and gas production, petroleum refining and product marketing.
Suncor has classified its operations into the following segments – Oil Sands (45% of 2016 FFO), exploration and production (22%), refining and marketing (44%), and corporate, energy trading and eliminations (-10%).
Another crucial industry other than oil and gas
As Canada’s premier integrated energy company, Suncor has an extensive history of 50 years as an energy producer. Suncor Energy pioneered commercial crude oil production from the oil sands of northern Alberta in 1967. It is the largest East Coast oil producer and is currently developing Canada’s Athabasca oil sands, which is one of the world’s largest petroleum resource basins.
Suncor Energy owns a balanced mix of high-quality mining, in situ and upgrading oil and gas portfolio. Suncor also has a huge offshore portfolio with more than 410 million barrels of crude oil reserves in strategic geographic locations like the U.K. North Sea, Canada’s east coast and Norway. Suncor is focusing on core assets and is streamlining its portfolio by divesting non-core assets.
Suncor has a strong presence in the upstream, midstream and downstream parts of oil supply chain. This integrated model has helped Suncor reach an industry leading position in both funds from operations and discretionary free cash flow per barrel. Suncor Energy has consistently maintained its FFO higher than its capital and dividend requirements, providing a layer of safety for income investors.
If February, Suncor raised its dividend for the 17th consecutive year when it announced a healthy 16.67% increase to its quarterly dividend. The company has successfully managed to increase dividends despite the volatility in oil prices.
Suncor plans to achieve 10% annual growth in production from 2016-2019. Dividends are expected to grow in line with production.
#13 — Brookfield Asset Management
Brookfield jumps a spot at number 13 on our Canadian dividend stock list. Brookfield is synonymous with quality and one of the world’s premier asset management companies. BAM has $250 billion+ in assets under management in 30+ countries. Brookfield has assets under four segments; Real Estate, Infrastructure, Renewable Power, and Private Equity. BAM also has a very impressive compound annual shareholder return of 16% and is targeting 10-15% annualized growth over the long-term.
Brookfield has over $30 billion of invested capital which generates $1.4 billion in annualized distributable cash flow. Although BAM has the lowest dividend yield of all companies on the list at 0.72%, their current payout ratio of 14% leaves ample room for continued dividend growth moving forward.
Brookfield Asset Management is a global alternative asset manager focusing on real estate, infrastructure, renewable energy as well as private equity.
Infrastructure investments accounted for the largest portion of investments at 46%, followed by real estate (21%), private equity (19%) and renewable power (14%) over the last twelve months. Over 85% of its revenues come from long-term investments.
The firm serves institutional and retail clients through its four partnerships – Brookfield Property Partners, Brookfield Infrastructure Partners, Brookfield Renewable Partners and Brookfield Business Partners. All these businesses seek to give long-term returns in the 12 -15% range.
Starting out as a builder and operator of electricity and transport infrastructure in Brazil almost 115 years ago, today Brookfield Asset Management has become a leading global asset manager with $250 billion worth of assets under management. The firm invests in large asset classes i.e. businesses worth $50-$100 billion.
Brookfield Asset Management has more than 100 offices in over 30 countries and invests in North America, EMEA, South America and Asia-Pacific regions. It acquires high-quality assets at favorable valuations and finances them through low cost, long-term capital.
The firm’s long-standing experience and reputation enable it to raise billions of dollars from institutional investors. Brookfield Asset Management is in a good position to access multiple sources of capital and allocate it to the best available opportunities globally.
Worldwide presence, a highly liquid balance sheet, strong investment expertise across asset classes and ownership of diversified assets differentiate Brookfield Asset Management from competitors.
Brookfield Asset Management has compounded its dividend in the high single-digit range over the last decade and the pace has remained steady. The firm recently raised its payout by 7% and is expecting a 22% total return over the next five years.
#12 — Atco Gas
Atco and big-brother Canadian Utilities (CU.TO) are subsidiaries of Atco Group of Companies. With a market cap half the size of CU, Atco often gets overlooked by investors. Don’t make the same mistake.
Atco has the fourth-longest dividend growth streak in Canada at 25 years. Perhaps even more impressive, it has the highest dividend growth rate among all Canadian Dividend Aristocrat Utility companies. Its 10, 5 and 3-year average all over around 15%.
Don’t expect this to change anytime soon. Atco also has the lowest payout ratio on a trailing and forward twelve-month earnings basis. As such, expect it to maintain double-digit dividend growth well into the future.
#11 — Enbridge
Enbridge stays steady in 2019 at #11, one up from last years list. If you want one of the highest dividend paying stocks in Canada, look no further than Enbridge. Recently, Enbridge has taken an absolute beating in share price, and their dividend yield is looking very lucrative right now.
The company is Canada’s largest energy company with a market capitalization of $69 billion. Enbridge breaks down operations in five segments; Liquids Pipelines, Gas Pipelines & Processing, Gas Distribution, Green Power & Transmission, and Energy Services. The company has $3.6 billion of organic growth backlog and is expecting $13 billion worth of projects to come online through 2017, each of which will drive near term cash flow growth.
Enbridge is one of Canada’s premier dividend growth companies having raised dividends for 23 consecutive years. It sports an impressive starting yield of 5.46% and management is committed to return capital to shareholders through increasing dividends. Over the medium term, management expects to grow dividends at an annualized rate of 10% through 2020.
Enbridge is the largest energy infrastructure company in North America, engaged in the collection, transportation, processing and storage of oil and gas. Often criticized for its complicated structure, the company has consolidated all of its sponsored vehicles. It purchased all outstanding shares of Spectra Energy, Enbridge Energy Services and Enbridge Income Fund Holdings.
Enbridge transports 28% of the crude oil produced in North America. It is Canada’s largest natural gas distributor and also transports 23% of the natural gas consumed in the U.S. Enbridge has a huge retail customer base comprising of 3.6 million customers in Ontario, Quebec, New Brunswick and New York.
Enbridge operates through five reporting segments – Liquids Pipelines (85% of 2016 EBIT), Gas Distribution (12%), Gas Pipelines and Processing (4%), Green Power and Transmission (4%), and Energy Services (-4%).
Commodity sales accounted for 66% of total 2016 revenues, followed by transportation and other services (27%), and gas distribution sales (7%). Enbridge typically enters into long-term contracts proving strong cash flow visibility. More than 95% of its revenue is insulated from volume and price risk.
With more than six decades of existence, Enbridge operates the world’s longest crude oil and liquids network. It also owns interests in nearly 3,000 MW of renewable generation capacity.
Enbridge owns a huge natural gas pipeline network with a total length of 205,424 miles and crude oil pipeline network of 18,666 miles. Its merger with Spectra Energy has resulted in the creation of the largest energy infrastructure company in North America.
It is difficult for new entrants to build large, balanced and diversified asset portfolio, huge customer base and an extensive network of distribution lines which provide a strong competitive moat to Enbridge’s business.
The company has paid dividends for over 64 years and raised them for 23 years in a row. Enbridge’s dividend grew by 16% CAGR over the last five years and the most recent hike was 10%.
#10 — Bank Of Nova Scotia
At number 10 on our list of the best performing Canadian dividend stocks for 2019 is the Bank of Nova Scotia, or Scotiabank for short. Bank of Nova Scotia is Canada’s third largest bank with a market capitalization of $93 billion.
Invest in one of the strongest industries in the country
BNS also sports an attractive 4.64% dividend yield, the second highest among Canada’s “big 5” banks. BNS has successfully differentiated themselves from their peers through an intense focus on digital banking. Scotiabank is motivated by a positive client experience and a mobile first design.
Along with their peers, Scotiabank is well positioned to take advantage of rising interest rates which will help the spread on net interest income (NII) margins. The company is targeting 14%+ Return on Equity and 5-10% earnings per share growth. With a high starting yield and growing earnings, dividend investors will continue to be well rewarded with their investments in BNS.
The bank typically announces a dividend raise every two quarters.
#9 – Bank Of Montreal
BMO moves up a spot on our list of the best dividend stocks of 2019.
The Bank of Montreal is a financial services corporation and its headquarters are located in, you guessed it, Montreal. All things considered, BMO is attractive as growth is poised to increase in Canada allowing yields to move higher which benefits the financial sector.
As Canadian government yields rise, Bank of Montreal will be able to borrow from the government and lend to customers, locking in attractive spreads.
At this point, the company is one of the top 10-banks in North America and produced revenues of $24 billion over the past twelve months. The organization focuses its banking efforts in the retail space but has three operating groups which include personal and commercial banking, wealth management, and capital markets sales and trading.
Presently the Bank of Montreal has an attractive 3.7% dividend yield, which means that you will collect 3.7% on the capital you use to purchase the stock.
#8 — Canadian National Railway
Making the jump from 9 to 8 this year is CNR. In terms of buy and hold stocks, CNR is up there as one of the best in Canada.
Canadian National Railway (CNR) has the prestigious distinction of being the only transcontinental railway in North America and is the second largest publicly traded railway in North America with an $80 billion market capitalization. CN Rail is dual-traded, which means it can be traded on both the Toronto (TSX) and New York (NYSE) stock exchanges.
Over the past 5 years, the company has grown revenues at an annual compound growth rate of 6%, free cash flow by 8% and operating income by 10%. Perhaps, even more important for dividend investors, the company has an average dividend growth rate of 16% over the same period.
CNR also has the distinction of being Canada’s largest-ever IPO when the company went public back in 1995.
CN Rail is well diversified, with no revenue product lines accounting for more than 24% of total revenues. Over the past 15 years, the company is also one of the most efficient railways in North America with the lowest operating ratio of all publicly traded railways.
Although its current yield of 1.85% is one of the lowest on this list, it also has the highest dividend growth rate and its low yield has been more than offset by significant share price appreciation. At 24 years an counting, it is tied for the ninth longest dividend growth streak in Canada.
#7 — Canadian Imperial Bank of Commerce(CM)
CIBC drops from number 2 to number 7 on our Canadian dividend stocks list. Above all, this giant financial institution focuses on service to individuals, small business, commercial, and corporate banking. It also service institutional clients and are active in capital markets trading.
It recently made its second purchase south of the border as it expands beyond the Canadian market.
The capital markets unit trades products such as foreign exchange, bonds, and equities around the globe. CIBC has a TTM net income of 5.3 billion and revenues of 16.89 billion. Being a bank, it is obviously affected by interest rates, and will generally perform better in a rising rate environment. Profits variation is usually predicted on revenues from the capital markets unit. As of writing, the company has a dividend yield of 4.84%.
#6 — TC Energy Corp
Jumping up one spot at number 6 on our list of the best Canadian dividend stocks for 2019 is TC Energy Corp.
In terms of the best dividend stocks for retirement income, TC Energy’s lucrative yield definitely makes them a stock to consider. TC Energy Corp is an oil and gas pipeline company that operates in three business segments including natural gas pipeline, oil pipeline, and natural gas storage.
TC Energy has its headquarters in Calgary Alberta and operates throughout North America. Due to it being a pipeline company it collects like a toll operator, receiving compensation when it provides access to transport oil and gas to specific destinations. Presently pipeline transportation is booked months in advance. This means that cash flow pledged is exposed to changes due to interest rates.
The cash flows are stable, making TC Energy an excellent dividend investment. TC Energy is an expert in power generation in Canada and the United States, as well as storage of natural gas. Therefore the price of natural gas has a large impact on the stock. Currently, TC Energy boasts a robust 4.5% dividend yield.
#5 — BCE
One of the highest dividend paying stocks in the Telecom industry, BCE jumps up at number 5 on our list of the top dividend stocks in Canada for 2019.
BCE is a telecommunications and cable provider focusing on wireless, internet and television services to residential, business, and wholesale customers in Canada. BCE was founded in 1983, and has its headquarters in Montreal Canada, and reported profits of 2.8 billion dollars over the past twelve months.
BCE operates in 3-segments. First, there is Bell Wireless, which provides wireless voice and data services. Secondly, Bell Wireline which provides data and satellite television. Finally, they have Bell Media which provides pay TV along with digital media and radio broadcasting. As of right now BCE has a dividend yield of 5.11%.
#4 — Telus
Telus jumps to number 5 this year on our list. A telecommunications company with its headquarters located in Vancouver British Columbia. Telus offers a multitude of products including television, phone, and internet services.
They have been providing services for more than 100 years. Their dedication for offering the best services possible is showing through their 12.7 million subscribers and their consistent dividend payouts and increases. Telus has increased its dividend nearly every year since 2001, starting at $0.075 a share into its current $0.565 today.
The company has 12.9 million customer connections, including 8.8 million wireless subscribers, 1.7 million Internet subscribers, 1.3 million residential network access lines and 1.1 million TELUS TV customers.
Wireless Services account for about 57% of total revenue, Wireline Data (residential network access lines, internet subscribers, TV subscribers) for 32%, and Wireline Voice for the remaining 11% of the total revenue.
TELUS is a leading network provider reaching 99% of Canadians with 4G LTE and HSPA+ technologies. The company’s focus on continuously improving customer experience has resulted in customers with one of the highest loyalty rates in the world.
A growing appetite for data should further support TELUS in retaining its leading market share position in the Canadian telecom industry. The telecom industry is highly capital-intensive with stringent regulations leading to high entry barriers. Pricing power, a large loyal subscriber base and extensive asset base are the company’s major competitive strengths.
TELUS has increased its dividend consecutively since 2002, growing it at more than 10% CAGR over the past decade. The company is targeting 7%-10% annual growth through 2019 as a part of its multi-year dividend growth program.
Though TELUS has a high payout ratio of 82%, recession-proof cash flows should support its dividend plan.
#3 — Royal Bank Of Canada
Royal Bank keeps climbing our list of the best Canadian dividend stocks in 2019. It’s not only an excellent dividend stock, but one of the best bank stocks to buy now. You know when you’ve got a stock like RY on your list all the way up at number 4, it’s going to be a good list.
The financial services giant focuses on a range of products including banking, wealth management, insurance, and capital markets trading. At this point the company has institutional clients throughout Canada, the U.S. as well as in 37 other countries. The bank is headquartered in Toronto and had profits of $12.28 billion over the past 12 months.
Of course with RBC being a bank the stock price is sensitive to interest rates and will rise when yields begin to accelerate higher. As of writing, Royal Bank of Canada has a dividend yield of 3.62%.
#2 — Fortis
Fortis is one of Canada’s most notable dividend companies and its 45 years of consecutive dividend growth is second all-time among Canadian companies. That’s why it sits at #3 on our list of dividend stocks to buy for 2019.
The company has grown exponentially over the years and has approximately $48 billion dollars in assets across Canada, the United States, and the Caribbean. It is the largest publicly traded utility company in Canada and one of the Top 15 in North America by assets.
The company operates in a highly regulated environment which for investors translates to predictable and reliable cash flows, which is a key financial metric when analyzing dividend payments. The company exudes confidence and has demonstrated a commitment to returning capital to shareholders through increasing dividends. Fortis currently has a very clear dividend policy and expects to grow their dividend at an annual average growth rate of 6% through 2021.
#1 — Toronto Dominion Bank
The winner of our top dividend stocks in 2019 is yet again Toronto Dominion Bank. For the 3rd year in a row TD has claimed our top dividend stock title. The financial services giant focuses on several segments which include retail, commercial banking, and credit cards. Additionally, TD bank covers insurance and wealth management.
The company has a large presence in the United States including branches that focus on personal and commercial businesses, U.S. credit cards, and Auto Finance as well the institutions investment its subsidiary TD Ameritrade Holding Corporation. The company is headquartered in Toronto and has 10.2 million online and mobile customers. The company boasts a dividend yield of 3.6%.
Toronto Dominion Bank is considered America’s “most convenient bank” and serves customers through 2,400 retail locations in North America. The bank was named one of the world’s safest banks and the safest bank in Canada for the sixth year in a row by Global Finance.
The bank has a strong retail focus (91% of earnings) with customers mostly comprising of low risk businesses having stable, consistent earnings. About 61% of its total earnings comprise of Canadian retail (TD Canada Trust, TD Auto Finance Canada, TD Wealth, TD Direct Investing and TD Insurance) sector, followed by 30% U.S. retail (TD Bank, TD Auto Finance, TD Wealth, TD Ameritrade) and 9% wholesale (including TD Securities).
Toronto Dominion bank operates in 4 of the top 10 metropolitan areas and 7 of the 10 wealthiest states in the USA. It also holds #1 or #2 in market share for most retail products in Canada. The bank is well positioned to leverage new growth opportunities through its large footprint in North America.
With a 150-year old legacy, the bank is highly rated by major credit rating agencies. Good customer service and convenience, strong customer relationships and a focus on operational efficiency are Toronto Dominion Bank’s key differentiators.
The bank has increased dividends for six years in a row. It has also delivered higher earnings for the seventh consecutive year. It raised its payout by more than 8% CAGR over the last decade and by 10.45% most recently.
Toronto Dominion Bank is targeting 7-10% adjusted EPS growth over the medium term. With a reasonable payout ratio of 44%, the bank should continue growing its future dividends in the mid-to-high single digit range.
Dividends are an excellent way to diversify your portfolio
While the notional value of the dividend is important, the dividend yield will provide you with the best gauge of your return on investment. An investor can calculate dividend yield by dividing the yearly dividend by the stocks price. For example, if you paid 100 dollars for 1 share and the annual dividend is 5 dollars, then your dividend yield is 5%.
You should also be diversifying your portfolio by adding stocks of companies that are in different sectors. Ultimately if all your eggs are in one basket you run the risk of sector underperformance. While there is a multitude of sectors in the Canadian market the economy is dominated by oil and gas producers, pipeline and storage companies, major financial institutions, and investment management trust companies. Still, each of these sectors has risks. Maybe not as risky as say the Canadian cannabis industry, but risky nonetheless.
Therefore if you would like to avoid direct exposure to oil and gas risk, you should avoid oil and gas stocks and stick to pipeline and storage companies which produce income like toll operators. Banks and insurance companies along with real-estate investment have exposure to changes in interest rates, as well as swings in their own riskier investment businesses. If you’re looking for a little more speculation when it comes to your stock purchases, check out our top 7 stocks to watch list. It contains some high growth potential stocks that you could blend into your dividend portfolio to create balance.
What’s the biggest risk with these Canadian dividend stocks?
In conclusion, interest rate exposure is the largest risk these Canadian dividend stocks face. Unfortunately, there has been subdued domestic growth. That being said, expectations of growth for Canada’s largest trading partner the United States, is improving.
The Bank of Canada’s cautious optimism is being supported by recent domestic economic data and global events. All things considered, Canada’s economy remains on the path towards sustainability, but ample uncertainties remain. Notably, ongoing political issues in the U.S. have further clouded the trade outlook as Trump’s agenda is increasingly at risk. Given these risks, it is likely that rates remain unchanged, which should buoy REITS and pipeline and storage companies. Furthermore, large financial institutions will have difficulty making income on lending, but subdued revenue in this sector should be offset by solid gains in capital markets trading.
What are your go to stocks when it comes to income investing? Did we miss one, maybe two? Do you mostly agree with our list? Let us know in the comments below!