Dividend investing remains a popular strategy, offering the satisfaction of regular monthly or quarterly payouts. While not all companies pay dividends, those that do are often larger, well-established firms—the kind you'll find on our list of the best dividend stocks.
However, dividends come with a trade-off: companies allocate earnings to shareholders instead of reinvesting in growth, which may limit long-term expansion. That’s why this list evolves with market conditions, just as your portfolio needs regular rebalancing.
Check back often to stay on top of the latest opportunities.
Buy dividend stocks with Questrade6 of the best Canadian dividend stocks to buy now
| Stock name | Symbol | Dividend Yield | Recent updates |
|---|---|---|---|
| Enbridge Inc. | ENB.TO | 7.79% | Forecasts higher 2025 core profit; raised 2025 dividend by 3%1 |
| BCE Inc. | BCE.TO | 12.00% | Concerns about dividend sustainability due to earnings not covering payouts2 |
| Suncor Energy Inc. | SU.TO | 5.00% | Raised quarterly dividend by 5% to 57 Canadian cents per share3 |
| Fortis Inc. | FTS.TO | 4.46% | Increased dividends for 49 consecutive years; projects 4-6% annual growth through 20274 |
| Royal Bank of Canada | RY.TO | 4.54% | Increased dividend by 2.9% to C$1.42 per share5 |
| Canadian Natural Resources Limited | CNQ.TO | 4.13% | Acquired Chevron's assets for $6.5 billion; raised quarterly dividend by 7%6 |
Please note that stock prices and dividend yields are subject to market fluctuations. It's advisable to consult real-time data and perform thorough research before making investment decisions.
Key insights
-
- Companies like Fortis Inc. and Royal Bank of Canada show consistent long-term growth, making them reliable options if you're an income-focused investor.
- Canadian Natural Resources and Suncor Energy have significantly outpaced peers in dividend growth due to strong earnings and resource expansion.
- Despite offering a high yield, BCE Inc. shows slower growth and faces sustainability challenges.
Stock dividends are a portion of a company’s earnings paid out to shareholders as a reward for investing in the business. When you own a stock that pays dividends, you receive regular payments—typically monthly, quarterly, or annually—just for holding the shares. This makes dividend stocks an attractive choice for investors looking to generate passive income.
What are dividend stocks?
Dividend stocks are shares of companies that pay out part of their profits to investors in the form of dividends. These stocks are often issued by established businesses with consistent cash flow and earnings, such as those in financials, utilities, energy, and telecom. They’re especially appealing because they provide income even when the stock price doesn’t rise.
Key points about stock dividends
- 1.
Part of total return: Dividends are just one part of a stock’s total return—the other being capital appreciation (the stock’s price increase over time).
- 2.
Stock price adjustments: When a dividend is paid, the stock price usually drops by the same amount. For example, if a company pays a $1 dividend, its stock price will likely decrease by $1 on the ex-dividend date. This reflects the payout coming from the company’s earnings.
- 3.
Not guaranteed: While some companies have a strong history of paying dividends (like those in the TSX Dividend Aristocrats), dividends aren’t guaranteed and can be reduced or cut if a company faces financial challenges.
How to invest in dividend stocks
If you’re serious about dividend investing, consider setting up a Dividend Reinvestment Plan (DRIP). With a DRIP, your dividends are automatically reinvested into additional shares of the same stock, helping you grow your portfolio faster. Reinvesting dividends allows you to take advantage of compounding — essentially earning returns on your returns — which can significantly boost your long-term gains.
Related: Why and how to DRIP: dividend re-investment plans
To get started, here’s a quick comparison of three top Canadian brokerages that make buying dividend stocks and reinvesting your earnings easy.
| Questrade | CIBC Investor's Edge | Qtrade |
|---|---|---|
|
|
|
|
◦ Offers a Synthetic DRIP, meaning dividends are reinvested in full shares of the stock (not fractional shares).
◦ No additional fees for setting up or maintaining the DRIP. ◦ How to set up: You can enable DRIP for individual securities in your account settings or by contacting support. |
◦ Allows DRIP for eligible stocks and ETFs traded on Canadian and U.S. exchanges.
◦ Only full shares are purchased; leftover cash remains in your account. ◦ How to set up: Call customer service or enable DRIP through your account settings. |
◦ Offers both Canadian and U.S. DRIPs free of charge
◦ A list of DRIP-eligible securities is available within the platform ◦ How to set up: In your online account by going to "Accounts," then "Service Centre," and selecting "Dividend Reinvestment" |
| Questrade review | CIBC Investor's Edge review | Qtrade review |
| Buy dividends with Questrade | Buy dividends with CIBC | Buy dividends with Qtrade |
Related: Best online brokerages in Canada
5 best dividend stocks to buy and hold based on Robb Engen's 4-step methodology
Back in my dividend stock picking days, I would look at a number of metrics before buying shares in a company.
- 1.
I liked stocks with a high dividend yield, but not too high for the payout ratio to signal trouble.
- 2.
I liked companies that were value-priced, meaning they were trading at a low price to earnings.
- 3.
I liked large-cap companies, also known as blue-chip stocks.
- 4.
Finally, I liked stocks with a strong track record of growing their dividend every year.
With those characteristics in mind, here are the best dividend stocks in Canada, according to Mr. Engen's methodology:
| Name (ticker) | Dividend yield | Payout ratio | Dividend growth | Why it fits |
|---|---|---|---|---|
| Enbridge Inc. (ENB.TO) | 7.79% | ~185% (elevated but supported by cash flow stability) | 28 consecutive years | A cornerstone of the Canadian energy sector with a reliable dividend history. Its yield is among the highest, and its regulated pipeline business ensures consistent cash flows. |
| Royal Bank of Canada (RY.TO) | 4.54% | ~43% (sustainable) | Over 12 years of consecutive increases | Canada’s largest bank by market cap, offering a strong combination of yield, growth, and financial stability. A consistent performer in any dividend portfolio |
| Manulife Financial Corp (MFC.TO) | 6.17% | ~50% (very sustainable) | Consistent increases annually | A global financial services leader with a conservative payout ratio and attractive yield. It balances risk and reward effectively |
| Fortis Inc. (FTS.TO) | 4.46% | ~75% (sustainable for utilities) | 49 consecutive years | Fortis is a defensive stock with predictable cash flows, making it a reliable choice for dividend growth even in volatile markets. |
| Bank of Nova Scotia (BNS.TO) | 6.52% | ~60% (healthy for a bank) | Long history of reliable payouts | A high yield among Canadian banks and a strong international presence. While growth has slowed recently, it remains a dependable dividend payer. |
Why are these the best 5 TSX dividend stocks?
They all have manageable payout ratios, ensuring dividends are less likely to be cut. Each company is also a leader in its sector — it's "blue chip" status provides reliability and stability. Finally, these stocks consistently increase dividends meeting criteria for long term growth. Read more details and see their charts by clicking each drop down menu.
Here's a bit more detail on each.
Enbridge is a leading energy infrastructure company in North America, operating the world's longest crude oil and liquids transportation system. The stock trades at a price-to-earnings (P/E) ratio of approximately 20.75, indicating moderate valuation. Enbridge offers a dividend yield of 7.79% and has a strong track record of increasing its dividend for 28 consecutive years, demonstrating its commitment to returning value to shareholders.
Royal Bank of Canada (RBC) is the largest bank in Canada by market capitalization, providing diversified financial services domestically and internationally. The stock has a P/E ratio of around 12.5, reflecting a reasonable valuation for a major financial institution. RBC offers a dividend yield of approximately 4.54% and has consistently increased its dividend for over 12 years, showcasing its financial strength and commitment to shareholders.
Fortis is a well-established utility company operating across Canada, the United States, and the Caribbean, focusing on regulated electric and gas utility operations. The stock trades at a P/E ratio of about 18.5, indicating a fair valuation within the utility sector. Fortis provides a dividend yield of 4.46% and boasts an impressive record of 49 consecutive years of dividend increases, highlighting its stable earnings and shareholder-friendly policies.
Bank of Nova Scotia, commonly known as Scotiabank, is Canada's third-largest bank, with a significant presence in international markets, particularly in Latin America. The stock has a P/E ratio of approximately 9.95, suggesting an attractive valuation. Scotiabank offers a dividend yield of 6.52% and has a long history of reliable dividend payments, making it appealing to income-focused investors.
Manulife is a leading international financial services group, providing insurance and wealth management solutions globally. The stock trades at a P/E ratio of around 8.21, indicating a potentially undervalued position. Manulife offers a dividend yield of 6.17% and has achieved six consecutive years of dividend growth, reflecting its robust financial health and commitment to enhancing shareholder value.
What makes these five dividend stocks stand out is their combination of low price-to-earnings ratios, low price-to-book ratios, high dividend yields, and sustainable dividend payout ratios. These characteristics scream “value” to dividend-focused investors looking to build their portfolios with safe and dependable blue-chip stocks.
However, some dividend investors look for dividend stocks with a specific set of criteria, like a high dividend yield or a long history of annual dividend increases. Our next two sections will look at the highest yield dividend stocks in Canada, plus the top 10 dividend growth stocks in Canada.
5 best dividend yield stocks (over 7%)
Indeed, many investors are simply drawn to stocks with a high dividend yield. Retirees often want to derive income from their investment portfolio and stocks with a high dividend yield are a good way to boost your retirement income.
Investing in high-yield dividend stocks can provide a steady income stream, especially when focusing on companies with sustainable payouts and strong financial health. Here are some notable high-yield dividend stocks with yields above 7% as of January 2025.
| Name (ticker) | Fast facts | Verdict |
|---|---|---|
| Altria Group, Inc. (MO) |
Dividend Yield: 8.0%
Payout Ratio: ~75% |
✅ Sustainable. Altria’s payout ratio is within a manageable range for a mature, cash-generating company. |
| Enterprise Products Partners L.P. (EPD) |
Dividend Yield: 7.4%
Payout Ratio: ~85% (based on distributable cash flow) |
✅ Sustainable. EPD’s cash flow is stable, and the payout ratio is reasonable for the energy infrastructure sector. |
| MPLX LP (MPLX) |
Dividend Yield: 7.3%
Payout Ratio: ~90% (based on distributable cash flow) |
🟡 Sustainable but tight. MPLX relies heavily on stable midstream cash flows, but a high ratio leaves less room for flexibility. |
| LyondellBasell Industries N.V. (LYB) |
Dividend Yield: 7.2%
Payout Ratio: ~120% |
❌ Unsustainable. LyondellBasell’s dividend exceeds its earnings, suggesting the company may be using reserves or debt to fund payouts. |
| Western Midstream Partners, LP (WES) |
Dividend Yield: 9.0%
Payout Ratio: ~100% (based on distributable cash flow) |
⚠️ At risk. WES is at the limit of its ability to support dividends with earnings, leaving no room for downturns. |
The trouble with high-yield dividend stocks is that there is no guarantee the dividend payout will remain sustainable. A high dividend yield often signals that the share price has fallen. The dividend may be at risk of being reduced or eliminated if the trend continues, or the situation doesn’t improve.
While high yields are attractive, it's essential to monitor the sustainability of these payouts. LyondellBasell Industries (LYB) and Western Midstream Partners (WES) are currently paying out more than or equal to their earnings, making them riskier dividend picks. For long-term reliability, focus on companies like Altria Group (MO) and Enterprise Products Partners (EPD) with manageable payout ratios.
One trick is to screen out any high dividend-yielding stocks that have a dividend payout ratio above 100%, meaning they’re paying out more cash than they’re bringing in.
Top 10 dividend growth stocks in Canada (Dividend Aristocrats)
Instead of picking dividend stocks with the highest yield, some dividend investors prefer stocks with lower dividend payout ratios but also a long history of increasing their dividends each year.
These dividend growers, also known as dividend aristocrats, are typically blue-chip stocks that are leaders in their respective industries and that have a wide “moat” around their operation that makes their business difficult to disrupt.
Here are the top 10 dividend growth stocks in Canada, along with their streak of raising their dividends:
- Analysis: Fortis is a North American utility leader with diversified operations across Canada, the U.S., and the Caribbean. Its regulated electric and gas utilities provide stable and predictable cash flows, supporting nearly five decades of dividend growth. Fortis has a low-risk business model and projects 4-6% annual dividend growth through 2027, making it a cornerstone for conservative dividend investors.
- Analysis: Canadian Utilities boasts the longest dividend growth streak in Canada, reflecting exceptional operational stability. The company generates reliable income from regulated utilities and contracts, primarily in Alberta. Its focus on renewable energy projects and long-term contracts provides a foundation for continued dividend increases.
- Analysis: CNR is a critical player in North American freight transportation, benefiting from its vast network and efficient operations. Its lower dividend yield is offset by consistent double-digit annual dividend growth. The company’s strong competitive moat, driven by cost advantages and market dominance, makes it a reliable dividend growth stock for long-term investors.
- Analysis: CNQ is a leading oil and gas producer with a diversified portfolio of assets. The company has demonstrated resilience through commodity cycles and continues to generate significant free cash flow, supporting steady dividend growth. Its low-cost production model and disciplined capital allocation underpin its ability to reward shareholders.
- Analysis: Metro is a leading grocery and pharmaceutical retailer in Canada. Its defensive business model provides consistent earnings, even during economic downturns. While its dividend yield is modest, Metro’s track record of increasing payouts annually for over two decades signals its financial strength and shareholder focus.
- Analysis: National Bank is a major player in Canada’s financial sector, with a strong presence in Quebec and growing international operations. Its earnings stability and prudent management have enabled consistent dividend growth. The bank’s focus on wealth management and commercial banking positions it for further dividend increases.
Analysis: RBC is Canada’s largest bank by market capitalization, with a diversified revenue base across banking, insurance, and wealth management. Its strong capital position and consistent profitability have supported over a decade of reliable dividend growth. RBC is a blue-chip staple for income and growth investors.
Analysis: Enbridge operates North America’s largest pipeline network, providing essential energy infrastructure. Its high dividend yield, coupled with nearly three decades of growth, reflects its reliable cash flow. While the payout ratio is elevated, Enbridge’s regulated operations support dividend sustainability.
Analysis: Telus is a leading telecom provider, offering stable revenues from wireless, internet, and TV services. Its dividend growth reflects strong cash flow generation and a disciplined capital investment strategy. Telus also invests heavily in technology and healthcare services, enhancing its growth prospects.
Analysis: TC Energy operates a vast network of pipelines and energy infrastructure across North America. Its regulated assets and long-term contracts provide reliable cash flows, supporting over two decades of dividend growth. Despite a higher payout ratio, its robust infrastructure base ensures dividend stability.
These companies exemplify the characteristics of dividend aristocrats: consistent growth, financial stability, and industry leadership. While yields vary, their histories of dividend increases signal strong business fundamentals and shareholder commitment.
Some of the companies on this list have a dividend yield under 2%. Don’t be fooled by the relatively low yield. These companies have had an incredible track record of increasing their dividends every single year for decades. A lower yield, plus a lengthy history of paying increasing dividends can signal a strong company that balances the need to reinvest and grow their business with the desire to reward shareholders with dividends.
Take Fortis, which has the second-longest consecutive dividend growth streak in Canada. It’s a utility company with reliable revenues and enough cash to constantly reinvest in its business and acquire new businesses as needed. Its shareholders have been rewarded handsomely with dividend increases every year like clockwork. It’s about as dependable a company as one could possibly invest in.
On the other hand, Metro is a grocery retailer with operations across Canada. Grocery stores have notoriously thin margins, but Metro has managed to increase its dividends every year for nearly a quarter of a century.
While its dividend yield is below 2%, Metro’s share price has seen an annual compound growth rate of 17.31% over the past eight years, compared to Fortis, which has seen compound annual growth of just 5.77% over the same period.
Risks and benefits of investing in dividend stocks
✅ Dividend stocks have had a good track record of beating the broad market index (like the TSX).
That has less to do with the company’s dividend policy and more to do with the fact that a typical dividend growth stock has exposure to known risk factors like value, size, and profitability – factors that explain stock returns.
❌ Furthermore, investing in individual stocks is risky, whether the company pays a dividend or not. Long-time safe “widow-and-orphan” stocks like General Electric (GE) have seen rapid price declines and have reduced or eliminated their dividend entirely. Oil and gas stocks were routed in 2015 when the price of oil collapsed, with many companies slashing their dividends in response.
Related: Why invest in renewable energy stocks
❌ Finally, investing in Canadian dividend-paying stocks restricts you to a small subset of a country that only makes up 3% of the global stock market. Canada’s highly concentrated stock market could see sustained periods of underperformance compared to other markets around the world.
Investing in low-cost, globally diversified index funds is likely the most sensible long-term approach.
Related: How to invest in index funds
✅ Still, many dividend investors find comfort in receiving quarterly dividends – whether they reinvest the proceeds or spend the cash. The steady income keeps dividend investors focused on the big picture and prevents them from panicking and selling in a downturn. That’s a good thing.
✅ For retirees who need the income, dividend stocks can pay out enough cash to meet your spending needs while also providing the potential for capital appreciation. Many retirees can’t stand the idea of selling shares to generate retirement income, so they look to dividend stocks to provide the income they need (even though there is no difference between selling $1,000 worth of shares and receiving $1,000 worth of dividends – both reduce the market value by $1,000).
How to choose the dividend stock for you
I’ve shown you how to screen stocks for the highest dividend yield, and why that might be problematic.
I’ve listed companies with the longest track record of increasing their dividend payments every year, and why this might be a better metric to use for long-term investing.
Now, how do you put it all together and choose the right dividend stocks for your portfolio?
One approach that I’ve found useful is to skim the holdings of some of the top dividend ETFs, heck, why not buy the best dividend ETF?
The iShares S&P/TSX Canadian Dividend Aristocrats Index ETF (CDZ) offers exposure to a portfolio of high-quality Canadian dividend stocks that have increased dividends for five consecutive years or more. It may just be the best ETF stock for dividends.
As of December 31, 2024, CDZ holds 92 companies across various sectors. Here are the top 10 holdings.
| Name | Weight | Description |
|---|---|---|
| Fiera Capital Corp Class A | 3.34% | A leading independent asset management firm offering a diverse range of investment solutions. |
| Aecon Group Inc | 3.18% | A prominent construction and infrastructure development company in Canada. |
| Capital Power Corp | 2.96% | A growth-oriented North American power producer. |
| Enbridge Inc | 2.61% | A major energy transportation company operating the world's longest crude oil and liquids transportation system. |
| TC Energy Corp | 2.53% | A leading energy infrastructure company in North America. |
| Canadian Western Bank | 2.39% | A diversified financial services organization providing specialized banking services. |
| Bank of Nova Scotia | 2.33% | One of Canada's Big Five banks, offering a range of financial services. |
| Canadian Imperial Bank of Commerce | 2.28% | A leading North American financial institution. |
| Allied Properties Real Estate Investment Trust | 2.15% | A REIT focused on urban workspace properties. |
| Manulife Financial Corp | 2.10% | A leading international financial services group. |
This type of dividend screening allows a do-it-yourself investor to “skim” off the top of a dividend ETF’s holdings and build their own dividend stock portfolio without paying the associated fees that come with holding an ETF. The MER on CDZ is 0.66%.
Whether you look for high dividend yield stocks, dividend stocks with a history of increasing their dividends, or use some other dividend evaluation metric, be sure to diversify across sectors and potentially outside of Canada as well. The U.S. has a much larger and more diverse stock market that includes dividend stocks with a much longer history of paying and increasing their dividends.
Should you invest in dividends?
Investing in dividend-paying stocks has long been a favored strategy for those seeking steady income and potential capital appreciation. However, the performance of dividend stocks can vary significantly depending on market conditions. Here are a few interesting points to consider:
- As of January 3, 2025, the iShares S&P/TSX Canadian Dividend Aristocrats Index ETF (CDZ), which tracks Canadian companies with a history of increasing dividends, has shown a year-to-date (YTD) return of approximately 0.81%.
- The recent data suggests that dividend-focused ETFs like CDZ have kept pace with the broader market, providing stability amidst market fluctuations.
- In comparison, the iShares S&P/TSX 60 Index ETF (XIU), representing the broader Canadian market, has experienced a YTD return of around 0.61%.
- This data indicates that, recently, dividend-focused investments have performed comparably to the broader market in Canada.
- In the United States, the iShares MSCI USA Momentum Factor ETF has notably outperformed the S&P 500, delivering a 40% return in 2024, compared to the S&P 500's 27% gain.
While dividend stocks offer the allure of regular income, their performance is influenced by various factors, including economic conditions, sector rotations, and investor sentiment.
However, it's essential to recognize that past performance does not guarantee future results.
You must assess your individual financial goals, risk tolerance, and investment horizons.
Diversification, regular portfolio reviews, and staying informed about market trends are crucial steps in making informed investment decisions.
Please note that investment decisions should be based on thorough research and, if possible, consultation with a financial advisor.
New to investing? Get a crash course with our How to start investing in Canada.
FAQ
Robb Engen is a leading expert in the personal finance realm of Canada and is also the co-founder of Boomer & Echo, an award-winning personal finance blog.
Tyler Wade has worked in personal finance for over 5 years writing for brands like Ratehub, Forbes, KOHO, and now Money.ca.
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