The Top Canadian Dividend Stocks for Long-term Investors

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Written by Demetris Afxentiou at The Motley Fool Canada

Finding one or more income-producing stocks to establish or augment an income stream is a goal of every investor. Fortunately, there’s no shortage of top Canadian dividend stocks for investors to consider buying right now.

Here’s a look at some of those top Canadian dividend stocks to buy for your portfolio.

Generate a juicy income with some top defensive picks

Every portfolio needs one or more defensive stocks to offset market volatility. Utilities and telecoms are great in this regard, and that’s why we’ll start with BCE (TSX:BCE) and Fortis (TSX:FTS).

BCE is one of the largest telecoms in Canada. The company boasts nationwide coverage for its core subscription services. BCE also boasts a large media arm, which includes radio and TV outlets that blanket the country.

BCE’s enviable infrastructure, as well as the services it provides make it a top defensive pick for any portfolio. That defensive appeal has only increased since the pandemic started as some workers and students continue to operate in a remote capacity.

But what makes BCE one of the top Canadian dividend stocks to consider? BCE boasts a juicy quarterly dividend with a yield of 6.13%, handily making it one of the better-paying options on the market.

Fortis is equally appealing. The company is one of the largest utilities on the continent, with operations across Canada, the U.S., and the Caribbean. As a utility, Fortis generates a recurring and stable revenue stream, which is backed by long-term regulated contracts.

That stable revenue stream makes Fortis one of the most defensive picks on the market. It also allows Fortis to invest in growth (which includes transitioning to renewables) and pay out a very juicy dividend.

As of the time of writing, Fortis’ dividend works out to a respectable 3.90%.

And that’s not all. Fortis boasts a whopping 49 consecutive years of annual increases to that dividend. Fortis is also on track to hit that 50-year mark later this year, becoming only the second Dividend King in Canada.

Banking on a recovery, and a juicy income

It would be near-impossible to compile a list of the top Canadian dividend stocks to buy without mentioning at least one of Canada’s big banks. And the bank that investors should consider right now is Canadian Imperial Bank of Commerce (TSX:CM).

CIBC is not the largest of Canada’s big banks. In fact, CIBC has the smallest international segment of its peers. As a result, CIBC’s domestic mortgage book is larger relative to its peers.

This has put the stock under pressure over the past year as rising interest rates have increased the risk associated with CIBC. As a result, the bank has seen its stock dip over 18% year to date.

So then, why is CIBC considered one of the top Canadian dividend stocks for long-term investors? That comes down to a few key points.

First, the big banks have historically weathered financial volatility much better than their U.S. peers. In fact, the big banks typically emerge stronger and ready to expand when the market recovers (which it will). In other words, CIBC’s current stock price should be looked upon as a discount for prospective investors to act on.

Second, adding to that discount is the stock split that CIBC underwent last year. While stock splits don’t create value, they do provide a lower cost of entry for investors.

Finally, there’s the dividend. Thanks to the above points, CIBC’s dividend has swelled to a 5.96% yield, making it one of the highest of its peers. For long-term investors looking for a buy-and-forget stock to generate income (or better, reinvested dividends), CIBC makes perfect sense.

3 top Canadian dividend stocks to buy now. But will you?

The three stocks mentioned above represent strong segment leaders in their respective areas. They also boast long-term growth potential and handsome dividends.

In short, they are great options that should, in my opinion, be a core part of any larger, well-diversified long-term portfolio.

The post The Top Canadian Dividend Stocks for Long-term Investors appeared first on The Motley Fool Canada.

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Fool contributor Demetris Afxentiou has positions in Fortis. The Motley Fool recommends Fortis. The Motley Fool has a disclosure policy.