Best Canadian Dividend Stocks

With Canada’s small size it is often disregarded by investors in the U.S. as a place to find the best Canadian dividend stocks. Yet, some Canadian dividend stocks have very high yields, and offer investors very strong returns, especially if they are looking to build out their income portfolios. While there are hundreds of Canadian stocks paying dividends, we have narrowed our focus to only those that have paid a dividend for at least five years. This criterion narrows the list to stocks that have had the ability to pay out income, and should reduce investor’s exposure to dividend cuts, which hurt returns.

Read more about the Canadian Dividend Aristocrats.

We track over 75 of the best Canadian dividend stocks; these include some with higher yields, higher earnings growth, and lower valuation multiples, etc… Since there isn’t one way to analyze these dividend stocks, we will review them in a variety of ways.

Top Canadian Dividend Stocks

Each of the ten highest dividend stocks in Canada (with at least five years of dividend history) has a forward yield of over 5%. Several of the stocks that made it into the top ten list are pipelines and REIT’s which tend to have higher yields than many other sectors. Still we note that the list is quite diverse across sectors. The highest yielding Canadian dividend stock is Aimia at over 9%, the company is a data-driven marketing and loyalty program provider (ie. Aeroplan) and is based in Montreal Canada. The stock is cheap with a P/E of about 10x and EV/EBITDA of about 7x, both on a forward basis. Clearly this stock may offer dividend investors an opportunity to do some more work to find out if this is a name for them.

Typically the higher a dividend the better the income generating ability of the stock, however, higher dividends can also imply an increased likelihood for a reduction in the dividend, which reduces income and tends to generate a capital loss as stock prices decline ahead of and after dividend cuts.

Best Canadian Dividend Stocks

Best Canadian Dividend Stocks 

One way to get access to a basket of Canadian stocks that pay dividends is by purchasing an ETF that holds many of these stocks. While there are many ETF’s of this nature, there are not as many options when looking specifically for a Canadian Dividend ETF. One possibility is the BlackRock Canadian Dividend Aristocrats Index ETF.

This ETF holds primarily financials, energy, industrial, and consumer discretionary stocks, with smaller allocations to the other sectors. This partially mimics the Canadian investment ecosystem as a whole, and is also a good way to get higher yield (via the financials space).

The top 10 holdings in this ETF make up about 30% of the total portfolio.

Holding                                                                                      Weight

Russel Metals Inc.                                                                    3.96%

Gibson Energy Inc.                                                                  3.66%

Corus Entertainment Inc. Class B                                          3.60%

Northern Property Real Estate Investment Trust              3.22%

Inter Pipeline Ltd.                                                                     2.69%

Alaris Royalty Corp.                                                                   2.68%

Genworth MI Canada Inc.                                                          2.52%

Exchange Income Corp.                                                              2.49%

IGM Financial Inc.                                                                       2.19%

Ensign Energy Services Inc.                                                        2.13%

Total                                                                                             29.14%