A Canadian dividend stock that pays out dividends on a monthly, quarterly, or annual basis can add much-needed income stability to your portfolio.
That said, investing in the best dividend stocks does not simply mean choosing the ones with the highest dividend payout ratios or dividend yields.
While evaluating your dividend stock picks, you should also consider the company’s overall performance, including its revenue growth, earnings per share (EPS), dividend growth rate, price-to-earnings (P/E) ratio, and the sustainability of its business model.
Below, I list the 15 best Canadian dividend stocks for 2023.
Best Dividend Stocks in Canada
Unsurprisingly, the top Canadian dividend stocks include a mix of dividend aristocrat stocks, big bank stocks, and some of the best monthly dividend stocks you can buy and hold in Canada.
1. Enbridge
- Symbol: ENB.TO
- Sector: Energy
- Dividend Yield: 6.39%
- Dividend Payout Ratio: 126.48%
- Market Cap: $108.98 billion
Enbridge shares have had a 10% compound annual growth rate (CAGR) over the last 26 years.
Even better, the company has steadily paid dividends to its shareholders for more than 66 years and is one of the best high-yield stocks you can buy.
This dividend aristocrat stock has a stable business across North America and is Canada’s largest natural gas distribution network.
Enbridge’s business includes pipelines for crude oil, natural gas transmission, gas utilities, and renewable energy.
ENB has a forward dividend yield of 6.39% and a payout ratio of 126.48%. Its significant cash flows support a high dividend payout ratio exceeding 100%.
2. Fortis
- Symbol: FTS.TO
- Sector: Utilities
- Dividend Yield: 4.24%
- Dividend Payout Ratio: 79.26%
- Market Cap: $25.54 billion
With an outstanding record of increasing dividends for 49 consecutive years, Fortis is a strong contender for one of the best dividend-paying stocks in Canada.
Fortis Inc. was founded in 1885 in Newfoundland and Labrador. It provides electricity to 3+ million customers in various markets, including Canada, the United States, and the Caribbean.
Electricity is a non-discretionary expense you pay for regardless of your budget, and I bet that Fortis will continue to enjoy significant growth in earnings for years to come.
FTS currently has a forward dividend yield of 4.24%, a dividend payout ratio of 79.26%, and a P/E ratio is 19.76.
As per the company’s forecast, the annual dividend growth rate until 2025 is expected to be 6% on average.
Fortis is also working on decreasing its carbon footprint, with a plan to reduce carbon emissions by 80% at TEP by 2035 and lower greenhouse gas emissions by 30% at its BC operations by 2030.
3. Royal Bank of Canada
- Symbol: RY.TO
- Sector: Financial Services
- Dividend Yield: 3.89%
- Dividend Payout Ratio: 43.35%
- Market Cap: $183.14 billion
The Royal Bank of Canada (RBC) is the largest bank in Canada based on market capitalization. It is also one of the best-performing banks in North America.
With over 17 million customers and operations in 36 countries, RBC’s earnings and asset base have continued to climb for over 50 years.
The forward annual dividend yield for RY is 3.89%, and its payout ratio is 43.35%.
The P/E ratio for RY is 11.97.
4. Bank of Nova Scotia
- Symbol: BNS.TO
- Sector: Financial Services
- Dividend Yield: 5.99%
- Dividend Payout Ratio: 47.01%
- Market Cap: $81.98 billion
Scotiabank is the third-largest bank in Canada and one of the oldest, having been founded in 1832.
BNS investors have enjoyed dividend increases in 43 of the last 45 years.
This stock is also one of the best and cheapest dividend stocks in Canada. Its forward annual dividend yield of 5.99% stands out among the other banks and it has a dividend payout ratio of 47.01% (higher than average for the industry).
Scotiabank has an asset base exceeding $1.1 trillion and operates in Canada, the U.S., Mexico, Europe, Asia, and Australia. It also owns Canada’s most popular online bank, Tangerine.
As of this writing, the P/E ratio for BNS is 8.24.
5. Canadian National Resources Limited
- Symbol: CNQ.TO
- Sector: Energy
- Dividend Yield: 4.20%
- Dividend Payout Ratio: 27.66%
- Market Cap: $89.79 billion
Canadian National Resources is one of the largest crude oil and natural gas producers in the world.
The company has operations in Canada, the United Kingdom, Gabon, and Cote d’Ivoire.
Based on a current price of $80.90 in November 2022, CNQ has a forward dividend yield of 4.20% and pays out just over a quarter of its net earnings as dividends.
As a part of the “Oil Sands Pathway to Net Zero” initiative, Canadian Natural Resources aims to achieve net-zero greenhouse gas emissions from its oil sands operations by 2050.
6. TC Energy Corporation
- Symbol: TRP.TO
- Sector: Energy
- Dividend Yield: 5.58%
- Dividend Payout Ratio: 109.85%
- Market Cap: $64.34 billion
TC Energy Corporation is one of the largest oil and gas pipeline operators in North America. It has pipeline infrastructure across Canada, the United States, and Mexico.
Like Enbridge, TC Energy can afford to pay out a dividend with a payout ratio above 100% because of its high rate of free cash flow.
The company operates 92,600 kilometres of natural gas pipelines and 4,900 kilometres of oil pipelines. It also operates in clean energy infrastructures like wind and solar energy generation.
It has a dividend yield of 5.58% and an average dividend yield of 5.06% over the last 5 years.
7. Toronto-Dominion Bank
- Symbol: TD.TO
- Sector: Financial Services
- Dividend Yield: 4.04%
- Dividend Payout Ratio: 43.85%
- Market Cap: $159.5 billion
Toronto-Dominion Bank is Canada’s second-largest bank by market capitalization, behind only the Royal Bank of Canada.
This bank has over 26 million global customers across multiple different countries. In Canada, it operates under the TD Canada Trust brand and has more than 11 million Canadian customers.
TD Stock has paid out a dividend of some sort for the past 164 years! Since 1995, the CAGR of TD’s dividend has been a staggering 11% per year.
With a current yield of 4.04% as of November 2022 and a payout ratio of 43.85%, TD is a foundational dividend stock for Canadian investors.
8. BCE
- Symbol: BCE.TO
- Sector: Communication Services
- Dividend Yield: 5.90%
- Dividend Payout Ratio: 117.64%
- Market Cap: $56.86 billion
Formerly known as Bell Canada Enterprises, BCE is the largest communications company in Canada. It is a top-10 high-paying Canadian dividend stock.
It also has a huge stake in the country’s media landscape with its ownership of CTV, TSN, Crave, iHeartRadio, and others.
BCE has a healthy dividend yield of 5.90%, and while its payout ratio is a whopping 117.64%, I’m not concerned, as its cash flow generation is spectacular.
9. Telus Corporation
- Symbol: T.TO
- Sector: Communication services
- Dividend Yield: 4.83%
- Dividend Payout Ratio: 91.23%
- Market Cap: $41.38 billion
Telus is the second telecommunications company on my list of the top dividend stocks in Canada.
The company was a first mover with 5G network technology, and it aimed to reach over 600 urban and remote communities in Canada by the end of 2021.
It has a 15.2 million customer base and has indicated plans to increase annual dividends by 7-10% until the end of 2022.
Telus’ high dividend payout ratio is backed by a solid cash flow base.
10. Shaw Communications Inc
- Symbol: SJR.TO
- Sector: Communications services
- Dividend Yield: 3.27%
- Dividend Payout Ratio: 70.12%
- Market Cap: $18.09 billion
Shaw Communications Inc is a telecommunications giant that provides internet and television services to customers primarily in Western Canada.
This stock is unusual on the Toronto Stock Exchange because Shaw has chosen to pay its shareholders a monthly dividend.
It has a five-year average annual dividend yield of 4.24% and a payout ratio of 70.12%.
11. Bank of Montreal
- Symbol: BMO.TO
- Sector: Financial services
- Dividend Yield: 4.22%
- Dividend Payout Ratio: 30.64%
- Market Cap: $88.99 billion
BMO is one of the largest banks in Canada and the oldest, with a 204-year history.
The bank has been paying dividends since 1829 and has a policy to pay out 40-50% of its earnings in dividends over time.
The Bank of Montreal has over 12 million customers globally and you can almost expect its dividend payouts to continue without interruption.
12. Granite Real Estate Investment Trust
- Symbol: GRT-UN.TO
- Sector: Real Estate
- Dividend Yield: 3.94%
- Dividend Payout Ratio: 34.43%
- Market Cap: $4.99 billion
Granite REIT holds a diversified portfolio of 139 properties across seven countries, including Canada, the U.S., the U.K., the Netherlands, and Germany.
This translates into 57.5 million square feet of leasable area in prime real estate markets around the world.
Its 3.94% forward annual dividend yield is decent and if you are looking to diversify your holdings, I consider GRT-UN to be one of the best dividend stocks right now.
13. National Bank
- Symbol: NA.TO
- Sector: Financial Services
- Dividend Yield: 3.82%
- Dividend Payout Ratio: 34.60%
- Market Cap: $32.31 billion
National Bank is the 6th largest bank in Canada, with assets exceeding $350 billion.
It has been expanding its operations outside Quebec and currently has 389 branches and 929 ATMs across Canada, serving 2.6 million customers.
As per its most recent investor facts sheet, the company aims to keep its dividend payout ratio in the 40-50% range.
14. Pembina
- Symbol: PPL.TO
- Sector: Energy
- Dividend Yield: 5.54%
- Dividend Payout Ratio: 52.55%
- Market Cap: $26.06 billion
Pembina Pipeline Corporation has been around for over 65 years and owns pipelines that transport oil and gas across Western Canada.
Pembina pays out cash dividends every month, which is rare for stocks on the TSX. The company competes with two other stocks on my list: TC Energy and Enbridge.
15. Canadian National Railway Company
- Symbol: CNR.TO
- Sector: Industrials
- Dividend Yield: 1.79%
- Dividend Payout Ratio: 37.02%
- Market Cap: $111.23 billion
With railway transportation remaining a principal way to move freight across North America, CN continues to do very well.
The Canadian National Railway has a 20,000-mile network spanning Canada and the U.S. It was established in 1919 and transports over 300 million metric tonnes of goods annually.
CNR has consistently increased dividends over the last two decades, and its balance sheet and cash flow statements look great.
Its P/E ratio as of this update was 23.22 in November 2022.
How To Invest in Canadian Dividend Stocks
You can invest in the best dividend stocks by either buying individual stocks directly or using Canadian dividend ETFs that hold multiple dividend stocks.
Purchasing individual stocks:
After evaluating a dividend stock using the relevant fundamental and technical analytical tools, you can purchase it using a discount brokerage account.
Picking individual stocks increases your investment risks as your portfolio could end up being concentrated in only a handful of securities. This is also referred to as a poorly diversified portfolio.
A dividend mutual fund or Exchange-Traded Fund (ETF) holds a bunch of stocks and pays out dividends similar to holding individual stocks.
These funds make it easier to diversify your holdings across various stocks with just one asset.
That said, you can expect to pay a small fee for this convenience, aka a management fee or Management Expense Ratio (MER).
If bank dividend stocks are what you fancy, these Canadian Bank ETFs are a great place to start your search.
How To Buy Dividend Stocks in Canada
My top choices for buying dividend stocks or ETFs in Canada are Questrade and Wealthsimple Trade:
In addition to supporting stock and ETFs, you can use Questrade if you want to purchase GICs, mutual funds, options, bonds, currencies, and precious metals.
This platform offers free ETF purchases and has a low fee for stock trading.
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