List of Best Dividend Stocks in Canada
What You Should Know
- A dividend-paying stock pays a certain amount of money to a shareholder periodically.
- Shareholders usually vote during shareholders' meetings on the amount and date of a dividend payout.
- The dividend yield is the ratio of the last dividend payment to the current price of a stock.
- A high dividend yield does not necessarily mean that a stock is a good investment because the price of a stock may decrease before the dividend cut is announced.
What Is a Dividend?
A dividend is a distribution of a part of a company’s profits to a certain class of dividend-paying shares. A dividend-paying share is a stock that pays a certain amount of money to every shareholder for each share they hold. A dividend is usually a small fraction of the share price, which means that the amount of dividend paid off can be written as a fraction of the share price. A shareholder is entitled to receive a dividend on a stock they hold if they don’t sell it before the dividend payout date. Some online trading platforms offer dividend reinvestment plans (DRIP) which automatically reinvests dividend into more shares.
The board of directors of a company decides what shares are dividend-paying before the shares are issued. Once the shares are issued, investors can buy those shares to receive a dividend. Depending on the type of share, the shareholder may have a right to vote at the shareholders' meeting or they may not have the right to do so. Before the dividend is paid out to the shareholders, the dividend must be approved by the board of directors. Once the board of directors votes for issuing a dividend, the dividend will be paid out to each share. A stock with a track record of consistently increasing its dividend also has had a track record of positively affecting the net worth of its holders.
It is important to note that a dividend-paying stock has two ways of providing income to the shareholder. First, it pays a dividend that may be consistent or growing over time. In addition to that, a dividend-paying stock changes in price depending on the news and market sentiment, which means that the shareholder may also realize capital gains or capital losses depending on the price of the share at the time of sale. The price of a dividend-paying stock may change, which means that the total return on a dividend-paying stock will not only be affected by the dividend yield but also by the price growth of a share. For example, if a stock paid $10 in dividends and increased in value by $5, then the shareholder made $15 while holding the stock. On the other hand, if a stock paid $10 in dividends but decreased in value by $15, then the shareholder lost $5 even though they received dividend payments. This means that not every stock with a high dividend yield is a good pick because the value of the share may decrease more than the dividends yield.
Many shares do not have a fixed dividend. Usually, the dividend is calculated and voted on by the shareholders, which means that if there is not enough money earned, there may be a dividend cut later on. A dividend cut may lead to a lower price of a share. Because of the lower price, the dividend yield may look high temporarily, but it will decrease once the dividend cut is announced. Any investment comes with a certain risk, and dividend-paying stocks are no different. It is important to make sure that your investments are in line with your risk tolerance and investment goals. Risk can be divided into general market and specific (issuer) risks. General market risk is not avoidable if you are invested in the market. But specific risks can be reduced by diversification. Self diversification can be very costly but using an instrument like one of the best Canadian ETFs or one of the best Canadian mutual funds enables cost-effective diversification. If you are specifically interested in dividend investing, you can see a list of Canadian ETFs with the highest dividend yield.
20 Highest Dividend Stocks in Canada
The information about the stocks has last been updated on September 21st, 2023.
A high-dividend stock does not mean that it is a good investment. It is important to be aware of the business activities and risks involved in investing in that type of business before buying their stock. The following list provides 20 stocks and ETFs with some of the highest dividend yields currently available.
1. Dominion Lending Centres Inc. - DLCG.TO
Dominion Lending Centers is a leading mortgage brokerage in Canada. It has over 2800 mortgage professionals working under one umbrella across Canada. Dominion Lending focuses on providing mortgage and leasing solutions. Their mortgage solutions can be used to buy a property now, renew or refinance an existing mortgage, or plan a future purchase.
DLCG.TO has currently one of the highest dividend yields among relatively safe dividend-paying stocks. As of September 2023, DLCG has seen a 5-year dividend growth of 12.47% with a dividend payout ratio of 23.08%. Strong dividend growth may signal robust dividend growth in the future while a low payout ratio (less than 50%) shows that the company retains enough resources to invest and expand its operations.
2. Manulife Financial Corporation - MFC.TO
Manulife is Canada's leading insurance and financial service provider. Manulife is headquartered in Toronto, Ontario, and it operates in Canada, the United States, and Asia. In Canada, Manulife provides a variety of financial services and products that include insurance, group benefits, group retirement, investments, wealth management, and banking.
MFC.TO has seen a 5-year dividend growth of 9.99%. The current dividend payout ratio was at 20.75%, which may indicate a future growth and expansion potential. With a dividend yield of 5.62%, MFC.TO is an attractive dividend stock with a strong business model.
3. Mullen Group Ltd. - MTL.TO
Mullen Group is one of the largest logistics providers in North America. It is headquartered in Okotoks, Alberta, and it operates in Canada and the United States. They operate as a network of independently operated businesses and provide a range of services, including less-than-truckload, truckload, warehousing, logistics, and hauling services.
MTL.TO had a dividend growth of 13.56% in the last 5 years and a payout ratio of 41.86%. Even though the payout ratio is close to 50%, the company may still have a reasonable growth rate as it reinvests the retained earnings into new ventures.
4. Whitecap Resources Inc. - WCP.TO
Whitecap Resources is an oil company based in Calgary, Alberta. It has operations in Alberta, Saskatchewan, and British Columbia. Whitecap’s strategy includes sustainable long-term growth, disciplined risk mitigation, and a premium asset base. They are recognized for their world-class CO2 sequestration and active community involvement.
WCP.TO has experienced a dividend growth of 6.53% in the last 5 years. It has a dividend payout ratio of 28.81%, which leaves the company plenty of resources to budget for the expansion of its operations.
5. Cogeco Communications Inc. - CCA.TO
Cogeco is a growing communications provider that mainly operates in Quebec, Ontario, and thirteen states in the US. It provides internet, video, and phone services to 1.6 million residential customers. It currently has 4,700 employees in North America, 2,988,248 primary service units, and its revenue reached $2.9 Billion for fiscal year 2022.
CCA.TO has a 5-year dividend yield growth of 10.39% and a dividend payout ratio of 33.40%. With the strong growth in dividend yield and a relatively low payout ratio, the company may have the necessary resources to continue to grow in North America.
6. Toronto-Dominion Bank - TD.TO
Toronto Dominion is a top 10 North American bank that aims to stand out by having a differentiated brand. It differentiates from competitors by anchoring to its proven business model, and a rooted desire to give its stakeholders the confidence to thrive in a changing world.
TD.TO is a well-established Canadian bank with a 5-year dividend growth of 8.66%. Its payout ratio of 48.77% indicates that the established company has the resources to continue its operations, but it may not grow as fast as smaller players on the market.
7. Canadian Western Bank - CWB.TO
Canadian Western Bank provides expert advice and specialized financial services such as business and personal banking and wealth management. The bank offers specialty banking services for small and medium-sized companies with a focus on general commercial, equipment financing, construction financing, commercial real estate financing, real estate construction and project financing, equipment financing, and leasing.
CWB.TO is a growing bank that had a dividend growth of 5.58% over the last 5 years. It’s payout ratio of 38.79% may indicate the management plan to further grow the bank’s presence with the retained earnings.
8. Suncor Energy Inc. - SU.TO
Suncor Energy produces and supplies energy that is safe, reliable, cost-efficient, and environmentally responsible. Their business focuses on producing oil from oil sands, exploration of international energy markets, crude oil refining, low-carbon power production, renewable fuel investments, supply and trading, and operating Petro-Canada gas stations. Suncor Energy has four pillars of focus: employees, reliability, process and personal safety management, and environmental excellence.
SU.TO has seen a 5-year dividend growth of 7.99%. The current dividend payout ratio was at 43.84%. This stock may be a good opportunity for dividend income from a well-established energy company.
9. National Bank of Canada - NA.TO
National Bank is the 6th largest bank in Canada and the leading bank in Quebec. They have made a series of ESG commitments to demonstrate their dedication to the well-being of future generations. They provide a variety of services for personal and business clients, and they also provide wealth management services.
NA.TO has had a strong dividend yield growth of 9.44% over the past 5 years. It also has a payout ratio of 41.68%, which leaves the company with some money to maintain its operations and potentially grow its business.
10. Sleep Country Canada Holdings Inc. - ZZZ.TO
Sleep Country is one of Canada's largest mattress and bedding retailers. They have physical stores across Canada as well as an online store that can deliver anywhere in Canada. Founded in 1994 in Vancouver, British Columbia, the chain grew to include over 265 stores across Canada.
ZZZ.TO has seen a 5-year dividend growth of 5.43% with a 34.05% payout ratio. The company, with well-established stores across Canada, may successfully maintain operations and acquire new customers in the future.
11. Tree Island Steel Ltd. - TSL.TO
Three Island Steel is a North American supplier of premium quality steel wire and wire products. It operates three steel production facilities in North America, including its flagship facility in Richmond, British Columbia. Their business focuses on the quality of their work and products, the responsiveness of their team, and a strong organizational culture.
TSL.TO has experienced 8.45% in 5-year dividend growth with only 22.64% of the payout ratio. This means that the company may have enough retained earnings to expand its operations and provide larger dividends in the future.
12. iA Financial Corporation Inc. - IAG.TO
iA Group is one of the largest insurance and wealth management groups in Canada that offers financial services that include insurance, savings, retirement, and loan products for individuals and businesses. It has $207.8 billion in assets, more than 4 million clients, over 9,000 employees, and more than 50,000 representatives.
AIG.TO has a strong dividend growth over the past 5 years of 12.70%. Their payout ratio is only 25.46%. A strong dividend growth and a low payout ratio mean that the company may keep growing rapidly in the future as it establishes its presence in the market.
13. Leon's Furniture Limited - LNF.TO
Leon’s Furniture is a furniture store that was founded in 1909 and has gained a large popularity in Canada since. Leon’s Furniture is one of Canada’s most respected retailers that shows consistent growth in sales and profits. Leon’s Furniture takes pride in the after-sales service they provide to their customers and the professionalism of their team.
LNF.TO has had a reasonable dividend growth of 5.92% over the past five years. Its dividend payout ratio is 30.05%. These metrics are comparable with another leading furniture retail company (ZZZ.TO), which makes this company also a reasonable retail investment for dividend income.
14. Nutrien Ltd. - NTR.TO
Nutrien is a fertilizer company, and it is the largest provider of crop inputs, services, and solutions in the world. Nutrien helps growers to increase food production in a sustainable manner. It has over 2,000 retail stores across North America, South America, and Australia, with over 23,500 employees.
NTR.TO is a well-established agriculture player with a 5-year dividend growth of 8.96% and a dividend payout ratio of 27.98%. Nutrien is a large worldwide player that may not be able to grow as fast as smaller players, but it still may be a safe investment opportunity for consistent dividend income.
15. Gildan Activewear Inc. - GIL.TO
Gildan Activewear is an American-owned Canadian manufacturer of branded clothing. It is also the world’s largest manufacturer of basic apparel, including activewear, underwear, and socks. Their business model, which combines manufacturing expertise and continuous investment, forms the backbone of their success. They pride themselves on the ethical and sustainable practices they have implemented in apparel production.
GIL.TO has seen a large 5-year dividend growth of 12.57% over the last 5 years. With a payout ratio of 26.10%, this stock has the potential to grow further in the future.
16. Urbana Corp - URB.TO
Urbana is an asset management company in Toronto that was founded in 1947. It has a small team with nine upper-management employees. Apart from providing asset management services, they also provide their market thoughts and a podcast about current market conditions.
URB.TO is one of the leaders in dividend growth, with a 5-year dividend growth of 14.87%. Its payout ratio is only 22.00%, which allows the company enough resources to expand its operations. Since Urbana is an asset management company, its dividend yield growth may correlate with the stock market growth over the past years.
17. Canadian National Railway Co. - CNR.TO
Canadian National Railway is a leading North American transportation and logistics company. The CN team of around 23,971 employees transports more than $250 billion in goods annually. CN railway network of approximately 18,600 miles spans across Canada and mid-America. The company earned $17.9 billion in revenues and a 59.9% operating ratio in 2022.
CNR.TO has also seen a large increase in dividend yield over the past 5 years of 12.17%. This strong growth in dividends paired with a payout ratio of 39.04% may indicate that the company may still grow its network and increase the profits for its shareholders.
18. Empire Company Ltd. Class A - EMP-A.TO
Empire Company Limited is a Canadian conglomerate that focuses on food retail and corporate investments. It was founded in 1963 and is headquartered in Stellarton, Nova Scotia. It owns the Sobeys market chain. Empire Company has approximately $31.5 billion in annual sales with $16.5 billion in assets and employs around 131,000 people.
EMP-A.TO is a subordinate share that does not have voting power, but it may have a higher dividend yield than the common shares. This share had a dividend yield growth of 9.46% over the last 5 years with a payout ratio of 25.00%.
19. George Weston Limited - WN.TO
George Weston Limited was founded in 1882, and it has two operating segments: Loblaw Companies Limited and Choice Properties REIT. Loblaw Companies is Canada’s largest food and pharmacy network, including corporate and independently operated stores. Choice Properties is a leading REIT that focuses on the ownership, operation, and development of high-quality commercial and residential properties. George Weston employs over 200,000 people and represents one of the largest private-sector employers in Canada.
WN.TO has experienced a 5-year dividend growth of 7.41% and a payout ratio of 22.54%. These metrics may indicate that the company has enough earnings retained to continue its expansion across North America.
20. TransAlta Corporation - TA.TO
TransAlta Corporation focuses on electricity power generation and wholesale electricity marketing. It is headquartered in Calgary, Alberta, with 76 power plants operating in Canada, the United States, and Australia. Their vision is to become a leader in clean electricity generation committed to a sustainable future.
TA.TO has a 5-year dividend growth of 5.08% and a payout ratio of 22.04%. The dividend growth was not as strong as other utility companies, but their low payout ratio may indicate a further expansion plan for the company.