In a volatile market, many investors flock toward stable growth companies that pay quarterly dividends. Consistent cash flow in a portfolio enables further buying opportunities when equities are priced lower— an event such as now. Picking high-quality dividend stocks is a time-consuming task for many investors, primarily because there are many factors involved in identifying quality.
Fortunately, the research has been done for you. Here are the top ten Canadian dividend stocks for the fourth quarter.
The First Five
Toronto-Dominion Bank (TD)
Toronto-Dominion Bank is among the largest corporations to provide banking and financial services across Canada. As of now, TD Bank stock has a dividend yield of 4.1% and a payout ratio of only 41.7%. Additionally, TD Bank has grown its dividend by an average of 8.6% on an annualized basis in the past five years.
Royal Bank (RY)
Royal Bank is the largest financial institution and banking services provider across Canada. Currently, Royal Bank shares offer a dividend yield of 4.1%, with a payout ratio of only 42.9% of earnings. Dividend growth has been consistent over the past five years, averaging an annualized growth rate of 6.9%.
Brookfield Asset Management (BAM)
Brookfield is one of the world’s largest asset management companies. The company briefly faced a slow period during 2020 which forced a temporary cut in the dividend per share. Despite this, the dividend has grown 5.9% over the past five years with a current yield of 1.3%, and a very low payout ratio of only 23.7%.
Power Corporation of Canada (POW)
Power Corporation of Canada is a management company that focuses on delivering financial services, primarily insurance and wealth management. The company has a strong dividend yield of 6.14% and a payout ratio of 50.5% of earnings. Additionally, annualized five-year dividend growth has been steady at nearly 7.4%
Canadian Pacific (CP)
Canadian Pacific is one of two Canada’s largest railway companies that transports products across the entire country and the mid-eastern United States. The current dividend yield is only 0.78%, but the payout ratio is very low at 22%. However, the company has nearly doubled its dividend in the past five years (5:1 split-adjusted data), which may be appealing to investors who are looking for dividend growth.
The Next Five
Two similar companies on this list, Suncor (SU) and Canadian Natural Resources (CNQ), both have payout ratios below 30% while providing a dividend yield of over 3.9% each. However, CNQ has outpaced Suncor’s dividend hikes with a five-year annualized growth rate of 21.4%.
Canadian Utilities (CU), a subsidiary of ATCO, manages a large portfolio of power generation assets. The company narrowly made this list because of its payout ratio of 74.1%, but nonetheless meets the criteria. The current dividend yield is a staggering 5.14%, with a five-year annualized growth rate of 4.87%.
Canadian National Railway (CNR), which scores below Canadian Pacific for dividend growth, has seen 11.7% annualized growth on its dividend with a payout ratio of nearly 41%. The dividend yield of almost 1.9% is enticing given the stability.
Lastly, Great-West Lifeco (GWO) is a Canadian insurance provider with a steady dividend track record. The dividend, which yields over 6.6%, has grown 6.2% per year in the past five years. However, the payout ratio is 53.2%, which is higher than some other stocks on this list.
Sources:
All dividend-related data: https://seekingalpha.com/
