10 Best Canadian Dividend Stocks for 2022

Last updated on May 15th, 2022 at 09:31 pm

The best Canadian dividend stocks make the perfect addition to any portfolio in 2022. These stocks have all shown a commitment to their investors through consistent dividend growth. A couple of stocks on this list have even increased their dividend for over 10 years running! Anyone looking to earn cash flow from their portfolio needs to look no further than these 10 best Canadian dividend stocks for 2022!

What are Dividend Stocks?

Dividend stocks are public companies that pay out regular dividends to their shareholders. Dividend stocks tend to be larger and more established than the average publically traded company. Dividend stocks also tend to have more stable earnings which allows them to make distributions to their investors on a regular basis.

Why Invest in Canadian Dividend Stocks?

Dividend stocks are great investments because they tend to be financially strong. Their financial strength allows them to weather market downturns and maintain a less volatile share price than growth companies.

Dividend stocks are also attractive because of the cash flow they offer. In fact, cash flow is probably the main reason Canadians prefer to invest in dividend stocks. The cash dividend stocks distribute can be used to purchase new shares as part of a Dividend Reinvestment Plan (DRIP), invest in other companies, or fund regular day-to-day expenses.

Another thing that makes Canadian dividend stocks so attractive is their tax advantage. That’s right, Canada has dividend tax credits at both the Provincial and Federal levels. These credits can offset much of the tax you’d pay on dividends earned from Canadian corporations.

Evaluating the Best Canadian Dividend Stocks

Finding great dividend stocks involves looking for companies with the right balance of these three attributes: 

1. Dividend yield
2. Dividend growth
3. Company valuation

What you’re looking for is a company with a strong commitment to its dividend and a long history of dividend increases. Being fairly valued is also essential, and so is having a dividend large enough to “move the needle” and deliver the cash flow you’re looking for.

It’s also important to be mindful of companies with a high dividend payout ratio. The dividend payout ratio tells us how much of a company’s earnings (after tax) are paid to shareholders. Although this ratio can fluctuate over time, any company paying too much of its earnings out as dividends is at risk of needing to reduce its dividend.

Best Canadian Dividend Stocks

Here’s the list of the best dividend stocks in Canada! Each of these companies strike the right balance between valuation, dividend growth, and dividend yield.

1. Algonquin Power & Utilities Corp. (AQN.TO)

Algonquin Power & Utilities Corp. is a diversified international generation, transmission, and distribution utility headquartered in Oakville, Ontario. With over 3,000 employees, Algonquin Power operates energy and water facilities across North America, including in Arizona, California, Texas and of course, Canada.

• Sector: Utilities
• Market Cap: $11,600M
• Dividend Yield: 4.95%
• Payout Ratio: 66%
• P/E Ratio: 14

Algonquin Power is currently on an impressive, 12-year streak of dividend increases. Looking at just the past 5 years, we see it has increased dividends by 9.21% on average—amazing! And despite its 66% dividend payout ratio, Algonquin Power is still a solid buy as it has managed to increase income by an average of 32.63% over the past 5 years and maintains a P/E ratio of just 14.61.

The investment thesis for Algonquin is simple: it’s a diversified utility making huge inroads on renewable generation. Algonquin Power has approximately 4 gigawatts of renewables in operation or currently under construction and operates 39 renewable energy facilities across North America. With the demand for renewable energy consistently increasing, Algonquin Power & Utilities Corp. is well-positioned to profit from this new market and take the lead on renewable energy projects across the continent.

2. BCE Inc. (BCE.TO)

BCE Inc. is the largest communications company in Canada and operates three distinct business groups: Bell Canada, Bell Mobility, and Bell Media. Headquartered in Verdun, Quebec, BCE Inc. and its subsidiaries employ over 50,000 employees and generates over 20 billion dollars of revenue per year.

• Sector: Communications
• Market Cap: 60,400M
• Dividend Yield: 5.27%
• Payout Ratio: 115%
• P/E Ratio: 20

BCE Inc. has grown its dividends by a respectable 4.78% average per year over the past 5 years. However, BCE Inc. does have an unusually high dividend payout ratio of 115%. It also has a somewhat elevated P/E ratio for a dividend stock, at 20, and less than stellar income growth, averaging -1.34% over the recent 5 year period.

Despite this, BCE Inc. is still an exceptional dividend stock, having increased its dividend for 13 years running. Also, with approximately 22 million subscribers, BCE Inc. is well-positioned to cross-sell its services and outcompete rivals Telus and Rogers Inc.

3. Restaurant Brands International Inc. (QSR.TO)

Restaurant Brands International Inc. was born from a mega-merger between American fast-food chain Burger King and revered Canadian coffee and donut shop Tim Hortons. Restaurant Brands acquired Popeyes Louisiana Kitchen in 2017 and continues undertaking an aggressive international expansion to increase its system-wide sales to over 35 billion dollars annually.

• Sector: Consumer Cyclical
• Market Cap: 22,600M
• Dividend Yield: 3.75%
• Payout Ratio: 88%
• P/E Ratio: 24

Restaurant Brands is a controversial company, with many Canadians disappointed with the declining food quality at Tim Hortons over the years. Much of that can be attributed to Restaurant Brand’s Brazillian affiliate, 3G Capital, which owns a 32% stake and has a penchant for cost-cutting and finding efficiencies.

However, the truth is in the numbers: Restaurant Brands has increased profitability and grown its dividend an average of 30.96% annually over the past 5 years, with 6 total years of consecutive dividend increases. This incredible dividend growth shows that Restaurant Brands is serious about attracting dividend-hungry investors.

4. Canadian Tire Corporation, Ltd. (CTC-A.TO)

You can’t get any more Canadian than Canadian Tire. Founded nearly 100 years ago, Canadian Tire has grown to be a staple of life in Canada, with over 1,686 locations and 58,000 employees across all of its subsidiaries. Canadian Tire has two classes of shares, with CTC-A having a substantially higher dividend yield than voting shares CTC.

• Sector: Consumer Cyclical
• Market Cap: 11,218M
• Dividend Yield: 2.82%
• Payout Ratio: 33%
• P/E Ratio: 10

Although it has a lower dividend yield than other best Canadian dividend stocks, Canadian Tire has shown its commitment through 11 consecutive years of dividend increases and an incredible 5-year average dividend growth rate of 15.94%. It also has a low 33% dividend payout ratio, showing that its dividend has much more room to grow.

The value proposition Canadian Tire offers is significant, with a P/E ratio of 10 and its 5-year average income growth rate of 10.79%. Despite the recent economic volatility, Canadian Tire has leveraged its acquisitions (Mark’s, Sport Check, Canadian Party City) to become more profitable than ever before.

5. Enbridge Inc. (ENB.TO)

No portfolio of Canadian dividend stocks is complete without Enbridge. Headquartered in Calgary, Enbridge employs over 11,000 people and generates revenues in excess of 50 billion dollars per year. It accomplishes this through its portfolio of crude oil and natural gas pipelines spanning across Canada and the United States. It owns and operates over 27,000 kilometres of crude oil pipelines and over 38,000 kilometres of natural gas pipelines—amazing!

• Sector: Energy
• Market Cap: 105,964M
• Dividend Yield: 6.58%
• Payout Ratio: 149%
• P/E Ratio: 18

Unlike some energy companies, Enbridge sees the writing on the wall and since 2002 has become an active player in the renewable energy business. To date, Enbridge has invested in 23 wind farms, 17 solar energy operations, and various other renewable energy projects from geothermal to hydroelectric power. These investments will give Enbridge the social license to continue transporting oil and natural gas across North America, even as our needs for those resources are reduced over time.

But at least for now, oil and gas are here to stay. And because of that, Enbridge has been able to sustain a relatively low P/E of 18 and an 5 year average income growth of 4.05%. Thanks to its tremendous earning power, Enbridge has been able to increase its dividend for 19 years, with its 5 year average dividend growth reaching an incredible 10% per year.

6. TC Energy Corporation (TRP.TO)

TC Energy is 60 billion dollar behemoth focused on developing and acquiring high-quality energy assets across the continent. Its main focuses are operating natural gas pipelines, crude oil pipelines, renewables, and energy generation. With over 92,000 kilometres of gas pipelines, TC Energy transports more than 25% of North America’s natural gas—even more than Enbridge.

• Sector: Energy
• Market Cap: 61,606M
• Dividend Yield: 5.54%
• Payout Ratio: 211%
• P/E Ratio: 33

TC Energy is also a responsible financial steward, having grown its dividend consistently for 18 years. The last 5 years were especially generous, with an average dividend growth rate of 8.61% annually. TC Energy has also has stated that its infrastructure assets and growth projects will allow it to continue its dividend growth trajectory in the range of 3 to 5 percent per year.

What sets TC Energy apart is the diversity of its asset base. From natural gas pipelines to energy storage and even nuclear power generation, TC Energy has so many levers to pull on to ensure it can maintain profitability in an ever-changing world.

7. The Toronto-Dominion Bank (TD.TO)

No dividend portfolio is complete without at least one of Canada’s big five banks. Headquartered in Toronto, the Toronto-Dominion Bank employs over 90,000 people and generates 41 billion dollars per year in revenue—and climbing. Its main businesses include personal, small business, and commercial banking, direct investing, wealth management, insurance, and private client services.

• Sector: Financial Services
• Market Cap: 186,955M
• Dividend Yield: 3.47%
• Payout Ratio: 52%
• P/E Ratio: 13

What sets The Toronto-Dominion Bank apart is its footprint of 2,200 retail banking branches spanning Canada and the U.S. Its huge U.S. footprint allows it to service over 6.5 million American customers, making it the 10th largest bank operating in the U.S. This is an admirable position to be in, as the ever-growing U.S. market will allow TD to expand its services and reach even more customers than are available in Canada.

Although its dividend yield isn’t as high as some other top Canadian companies, TD Bank has shown a remarkable commitment to its investors with over 11 years of consecutive dividend increases. In the last 5 years alone, TD Bank increased its dividend by an average of 8.47% per year. But probably the best reason to invest in TD Bank is its earning prowess; TD Bank has managed to increase income by an average of 8.98% in each of the last 5 years.

8. Manulife Financial Corporation (MFC.TO)

Manulife Financial is one of Canada’s leading financial service businesses providing financial advice, insurance, and wealth management solutions for individuals, groups and institutions. If you have a group RRSP or employer-supported life insurance policy, chances are Manulife Financial is managing them.

• Sector: Financial Services
• Market Cap: 50,469M
• Dividend Yield: 4.31%
• Payout Ratio: 44%
• P/E Ratio: 8

As the largest insurance company in Canada, Manulife Financial employs over 37,000 people and has a roster of 63,000 agents providing their services across Canada, Europe, the U.S. and Asia. This global diversification makes Manulife Financial an incredibly attractive investment as a Canadian dividend investor. Using its global reach, it has managed to accumulate over a trillion dollars in assets under management, making it one of the world’s largest asset managers.

Manulife Financial has also shown a commitment to their dividend investors, having increased their dividend for 8 years running. And for the past 5 years, Manulife Financial has increased its dividend by an average of 9.22% per year. However, what makes Manulife Financial so attractive is its capacity for future dividend increases. At an average of 23.42% per year over the past 5 years, Manulife Financial has grown its income consistently, becoming more profitable than ever before.

9. Power Corporation of Canada (POW.TO)

The Power Corporation of Canada is a uniquely positioned management and holding company. Headquartered in Montreal, Quebec, Power Corp holds large stakes in businesses spanning the insurance, retirement, wealth and investment management spaces. This includes majority stakes in Great-West Lifeco, IGM Financial, Wealthsimple, and more.

• Sector: Financial Services
• Market Cap: 29,977M
• Dividend Yield: 4.62%
• Payout Ratio: 82%
• P/E Ratio: 10

Power Corporation of Canada has a history of making smart acquisitions and deploying its capital where it can expect the best return. And with over 2.2 trillion dollars under administration and 31 million clients across the world, Power Corp has a lot of levers to pull on to generate positive returns for shareholders.

Dividend investors should be interested in Power Corporation of Canada for two main reasons: generous dividends and increasing profitability. Those dividends have been paid for 7 consecutive years, and raised by an average of 11.51% per year over the past 5 years, prove Power Corp is committed to its shareholders. On top of that impressive dividend growth, Power Corp itself has grown considerably over the past 5 years. This has allowed it to grow income at an average rate of 8.57%.

10. Granite Real Estate Investment Trust (GRT-UN.TO)

The Granite Real Estate Investment Trust (REIT) is a 6 billion dollar investment trust focused on warehouse and logistics properties in North America and Europe. It has 126 properties in its portfolio and over 50 million square feet of managed floorspace. Some of the largest business operating in Canada lease space from Granite REIT, including Magna International, Amazon, Walmart, and more.

• Sector: Real Estate
• Market Cap: 6,480M
• Dividend Yield: 3.04%
• Payout Ratio: 75%
• P/E Ratio: 6

The investment case for Granite REIT is that it has a unique, institutional-quality real estate portfolio. Unlike other REITs that invest primarily in apartments or office space, most of Granite REIT’s properties are leased to large businesses for warehousing or industrial use. In fact, over 60% of its leased floor space is allocated to e-commerce businesses like Wayfair and Amazon. As e-commerce continues to grow, Granite REIT will be well-positioned to grow its earnings and asset base even more.

Although Granite REIT doesn’t pay as large of a dividend as other best dividend stocks in Canada, it has shown a strong commitment to its dividend with 8 years of consecutive dividend increases. And thanks to the e-commerce wave, Granite REIT has been able to grow its income by an average of 12.44% over the past 5 years. It’s almost certain that Granite REIT will continue raising its dividend on the back of this impressive earnings growth.

Choosing the Best Canadian Dividend Stock

Choosing any stock can be very subjective, and one can make an argument for many different Canadian dividend stocks. BCE Inc. has been the strongest performer over the past 5 years but faces stiff competition from competitors Rogers and Telus. TD Bank is also a contender, with its solid dividend growth and a strong valuation, but its yield of 3.47% leaves a lot to be desired.

But based on the metrics I look for—yield, dividend growth, company valuation—it’s clear that Algonquin Power & Utilities Corp is a standout, achieving full points. It has also performed handsomely over the past few years. Tied for the best dividend stock in Canada Manulife Financial, which also achieved full marks for yield, dividend growth, and valuation.

However, to be successful at dividend investing, you don’t need to pick the best dividend stock. You just need to buy good dividend stocks consistently and hold them long-term. For that reason, all dividend stocks in this list would likely prove to be valuable additions to any portfolio.

Thanks for Reading

I recently updated a few articles that you may be interested in. This includes my post on the best dividend ETF in Canada and my choice for Canada’s best REIT ETF. Consider giving those a read if you think they’ll help you on your financial journey!

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