Why I’m Keeping a Close Eye on These Dividend All-Stars

There are plenty of dividend stocks in the Canadian market for investors to choose from. That said, I’d say a very small portion would probably fit into the “all-star” bucket, or at least my own personal watchlist (which I think is chock full of such all-stars). Time will tell if that is the case.

But in terms of the top dividend stocks I’m most watching right now, there are two that stand out as potential winners over the short (one-year), medium and long-term horizons.

Sienna Senior Living

For investors looking to take advantage of the fairly dominant demographic trends currently taking place, Sienna Senior Living (TSX:SIA) is a top stock to consider.

As the company’s name suggests, Sienna owns and operates an extensive portfolio of senior housing properties, primarily located in the Canadian market. As the average age of Canadians continues to rise and more baby boomers seek a comfortable retirement with the care they need, Sienna’s portfolio of high-quality assets in key Canadian markets should deliver meaningful net income growth.

With a 4.5% dividend yield and plenty of balance sheet room to continue increasing dividends over time, I think Sienna’s much-improved balance sheet and growth prospects make this a top stock to consider here. While it was previously overvalued as investors broadly looked to ride out these aforementioned demographic shifts, I like to think that Sienna has been left for dead (generally speaking) by the market in recent years.

While this stock no longer offers a dividend yield in the high single digits, this is a yield I think is worth getting into. In terms of a stock with both passive income and growth benefits, Sienna is one of my top picks right now.

Whitecap Resources

Another top Canadian dividend stock that I keep harping on is Whitecap Resources (TSX:WCP).

With a dividend yield of 6.2% and a price-to-earnings ratio of less than ten times, there is a lot to be said about Whitecap’s underlying valuation and income potential.

Perhaps the most impressive thing about these returns is the move WCP stock has made in recent years. With trading near a decade high, investors are clearly pricing in wider margins and upside potential if oil prices can hold their levels.

That’s a big ask, and there’s a big risk with every energy producer. For those in the small or mid-cap range (I’d put Whitecap in the mid-cap bucket) that may be more true.

But with an improving balance sheet and ample operating leverage (revenue nearly doubled year-over-year last quarter, partly due to rising production), there’s a lot to be said about where this stock is right now.