In this current market environment, I would say that investors who focus primarily on gaining exposure to companies with solid balance sheets and strong earnings expectations are likely to perform better. To a large extent, I’d say most dividend stocks are representative of companies that fit this model.
That’s because dividend-paying companies typically need stable balance sheets and cash flow growth prospects to maintain their payouts. With investors facing greater uncertainty than we’ve seen in a while, investing in dividend stocks could prove to be a winning strategy for those who think long-term.
Here are, in my opinion, three of the best dividend stocks Canada has to offer right now.
Killam Apartment REIT
In the field of real estate investment trusts (REITs) Killam Apartment REIT (TSX:KMP.UN) remains one of my top picks for investors looking for a nice combination of returns and capital growth over time.
The trust’s unique focus on key regional markets in Canada will benefit investors as these regional markets see greater rental growth and lower occupancy rates over time. The pandemic boom has certainly helped this REIT in particular, given Killam’s focus on the maritime sector and other parts of the country that other larger players may not be as active in.
But with the return to work mandates and a shift back to the big cities, Killam’s share prices have not been as robust as other stocks in this space.
That said, I still think interest rates are likely to fall, and the work-from-home trend will continue in the long term. For those who feel the same way, taking Killam’s stock to levels near five-year lows seems like a smart move. In particular, investors achieve an impressive dividend yield of 4.3%.
Rogers Communications
In the Canadian telecommunications sector Rogers Communications (TSX:RCI.B) remains one of the best options for dividend investors to consider.
The company’s 3.7% dividend yield is about as robust as it gets, backed by solid cash flows through the company’s core telecoms business. With other sports and entertainment activities to complete the portfolio, this is a company that is larger and more diversified than many of its peers. That’s a model I like.
I think Rogers is well positioned to continue increasing its dividend over time. For those who like the stability that the telecom sector offers, I think investors still have the green light to buy this stock, even after the recent rally over the past few months.
Cenovus energy
One of the best Canadian energy stocks that I don’t talk about enough is Cenovus energy (TSX:CVE).
Shares of the Western Canadian oil and gas producer have been on an absolute decline over the past five years, rising from around $5 per share to the $25 level over this period.
Many of the best AI stocks on the market haven’t seen these kinds of returns. Those who have remained consistent in their approach and continued to invest in energy giants like Cenovus have been rewarded.
Of course, commodity price volatility could continue, and this rally could reverse at some point. If we see recessionary forces materialize, lower energy demand, combined with economic weakness, could drive earnings weakness for companies like Cenovus.
That said, in the long run, I think most investors would agree that we need more energy, not less. For those looking for a top dividend stock to consider in this space, I think CVE stock and the 3.1% yield it offers is worth it right now.
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