For dividend investors, the pool of companies to choose from is as broad as it is confusing. There are high-yield dividend stocks that are producing good income today, but the market may be signaling that their future dividend growth potential may be limited (or there may be a cut or elimination in the future). For those looking for stocks with lower interest rates, growth rates may be higher, which is implied by a recent increase in the price of a particular stock. But that doesn’t necessarily bode well for longer-term returns.
So what are the best options for dividend investors to consider? Well, here are three Canadian stocks currently on my shortlist of opportunities that I think are worth considering.
Let’s explore the most promising Canadian stocks for dividend investors, with standouts like Suncor, Dream Industrial REIT and Canadian Tire, each offering unique advantages in their respective sectors.
Zoncor
As for Canada’s top energy stocks: Zoncor (TSX:SU) has to be one of my top picks.
The Western Canadian oil sands producer has seen its share price move higher this year, despite the decline in the price of Western Canadian Select. That’s mainly because Suncor has among the best underlying operating fundamentals in its core sector. This means that Suncor can get a barrel of oil out of the ground cheaper than the competition. By doing this, Suncor is able to maintain solid margins and cash flow growth, which it continues to pass on to shareholders in the form of dividends and share buybacks.
With a current dividend yield of 3.8% and plenty of capital growth left (in my opinion), this is a stock that I think any long-term investor can buy at current levels and wait for the next rally to materialize.
Dream Industrial REIT
There are few subsectors of the real estate market that I like more than industrial real estate. The versatility this asset class offers to forward-looking investors is remarkable. Dream Industrial REIT (TSX:DIR.UN) and others in this space operate the warehouses and distribution centers that support the massive economic growth driven by same-day delivery and other e-commerce trends.
The company’s current dividend yield of 5.3% is well covered and backed by a rock-solid portfolio of real estate assets in some of the most sought-after markets in North America. For investors who are underweight their real estate exposure, Dream Industrial is a top name that I think deserves consideration right now.
Canadian band
One Canadian stock that has actually been on a sideways trend for the past five years and that I think could be a solid buying opportunity right now is none other than Canadian band (TSX:CTC.A).
Canadian Tire stock is currently trading slightly below where it traded five years ago. That’s incredible considering Canadian Tire’s dividend yield is now above 4% after years of dividend growth.
Once one of the few retailers to see price increases in the past, it appears investors are ditching their brick-and-mortar retail names and moving toward online-only businesses. The point is that Canadian Tire has strengthened its position in this area and has one of the best online ordering/collection programs of any Canadian retailer. In that regard, I think this is a company positioned for continued growth over time, regardless of where Canadians pick up their tires or household goods.
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