3 Canadian stocks that produce income and potential capital gains

Dividend income has long been an excellent way to earn consistent income. And I’m not here to tell you otherwise. However, this is certainly not the only thing investors should pay attention to when identifying strong companies to invest in. How will investors finance those dividends if the company doesn’t flourish? That’s why today we look at three dividend stocks that offer not only income, but also potential capital gains.

EIF

Exchange income (TSX:EIF) is one of those rare Canadian companies that is quietly delivering both solid earnings and long-term growth potential. The Winnipeg-based company operates a diversified portfolio of businesses, primarily in aerospace and manufacturing, giving it stability and flexibility across different economic cycles.

On the revenue side, the EIF is a reliable payer. It offers a dividend yield of approximately 3.4%, pays out monthly, and has a strong track record of maintaining and growing that payout over time. The dividend is supported by recurring cash flows from Northern Canada’s regional aviation services and specialty manufacturing operations in sectors such as aerospace, environmental equipment and infrastructure.

But what sets Exchange Income apart is its ability to grow. The dividend stock consistently reinvests its cash flow in new acquisitions. This disciplined buy-and-build approach has increased earnings power year after year. As acquired companies mature and margins improve, the dividend stock price tends to rise along with the dividend.

SIS

Savaria (TSX:SIS) is one of those under-the-radar Canadian dividend stocks that has built a strong reputation for delivering both reliable income and meaningful long-term growth. Based in Laval, Que., Savaria specializes in accessibility solutions such as home lifts, wheelchair lifts and adaptive vehicles. It now serves a market that is growing rapidly as the population ages and demand for mobility assistance increases.

Savaria’s income appeal starts with the dividend. The company currently offers a yield of around 2.6% and has a solid history of payouts and modest payout growth. The dividend is well supported by operating cash flow from a diversified business spanning residential, commercial and healthcare applications. Even in periods of economic uncertainty, Savaria’s essential services ensure that the order book remains strong.

Beyond income, the real appeal of Savaria is the potential for capital gains. The dividend stock employs a disciplined growth strategy that combines organic expansion with strategic acquisitions. Over the past decade, Savaria has integrated several complementary businesses, expanding its product range and global reach.

JEWEL

Jamieson Wellness (TSX:JWEL) is a Canadian dividend stock that offers both income and growth potential thanks to its leadership in the global health and wellness market. Headquartered in Toronto, Jamieson is one of Canada’s most recognizable names in vitamins, supplements and natural health products. Jamieson also enjoys strong competitive advantages. The brand has decades of consumer trust and its vertically integrated operations allow it to maintain quality and control costs.

From an income perspective, Jamieson pays a quarterly dividend that grows with profits. The return is now 2.7%, supported by predictable income streams from the broad product portfolio. The dividend stock benefits from repeat consumer purchases and a strong shelf presence at major retailers in Canada and abroad, providing it with consistent cash flow even in uncertain economic conditions.

However, the real appeal for long-term investors is the potential for capital growth. Jamieson is pursuing an international expansion strategy, particularly in Asia, where the health and wellness markets are flourishing. The acquisition of Nutrawise Health & Beauty in the US and the intended growth in China have already diversified the sales base beyond Canada. With margins improving and demand increasing in multiple markets, JWEL is well positioned to scale.

In short

Now I understand: None of these three dividend stocks offer huge income via dividends. Over time, however, compounding will help accelerate capital gains. In fact, this is what $7,000 invested in each stock could yield.

COMPANY	RECENT PRICE	NUMBER OF SHARES	DIVIDEND	TOTAL PAYOUT	FREQUENCY	TOTAL INVESTMENT
EIF	$77.51	90	$2.64	$237.60	Monthly	$6,975.90
SIS	$21.57	324	$0.56	$181.44	Monthly	$6,991.68
JEWEL	$34.90	200	$0.92	$184.00	Quarterly	$6,980.00

So for those looking not only for some income now, but also for capital gains in the future, these three dividend stocks should definitely be on your watchlist.