13 Best Canadian Dividend Stocks for 2022

Mrs. T and I are working toward financial independence by investing in dividend stocks and index ETFs. Our plan is to live off dividends so we are always on the lookout for great dividend stocks to invest in. What are some of the best Canadian dividend stocks?

When it comes to picking the dividend stocks, it is important to not just look at the dividend yield alone. Other factors like dividend growth rate, earning history, company revenue growth, return on equities, and cash flow are also important to monitor. I also think total return is just as important.

If you look at our dividend portfolio, you will notice that we own quite a bit of Canadian dividend stocks. While we have been trying to own more ex-Canada dividend stocks, the reason for owning so many Canadian dividend stocks is mostly due to the exchange rate.

Which stocks made my best Canadian dividend stocks list?

Top 13 Canadian Dividend Stocks

Here are my best 13 Canadian dividend stocks for 2022. These picks are based on total return- a combination of dividend growth and stock price appreciation.

We typically add shares to dividend stocks that we already own whenever there’s a pullback or on a day that the market is down. Having said that, if you plan to hold a stock for decades, it’s more important to be in the market and let your stock grow rather than waiting for the right entry price point. Because the right entry point may never happen.

1. National Bank (NA.TO)

Some Canadians may not be are aware of National Bank because it is heavily concentrated in Quebec. But it might come as a surprise that National Bank is the sixth-largest bank in Canada with Quebec contributing 62% of its revenues.

National Bank has done quite well from a share price point of view. In the last five years, NA’s share price has returned 74.87%. Let’s not forget that National Bank also has raised dividends throughout that period too. National Bank recently raised their dividend payout by an impressive 23%! This news made many NA shareholders, us included, very happy.

  • Sector: Financial Services
  • Dividend Yield: 3.48%
  • Dividend Payout Ratio: 38.8%
  • PE Ratio: 10.46
  • 5 Year Dividend Growth Rate: 6.4%
  • Dividend Increase Streak: 12 years

I picked National Bank as one of my best Canadian dividend stocks mostly because it’s a smaller player compared to the Big Five Banks. Being a smaller bank, National Bank can adopt strategies and change quicker than the Big Five Banks. The free commission trade offered by National Bank Direct Broker should help National Bank to attract new customers as well.

I believe National Bank will continue to raise its dividends given the payout ratio is on the low end of the historical payout ratio.

2. Alimentation Couche-Tard (ATD)

Alimentation Couche-Tard doesn’t have the highest dividend yield but its dividend growth rate over the last ten years has been fantastic. ATD also has had some fantastic revenue growth and strong cash flow. The strong growth is contributed to the 14,000 convenience stores in North America and Europe.

Best Canadian dividend stocks - Alimentation Couche-Tard global footprint
  • Sector: Consumer Defensive
  • Dividend Yield: 0.89%
  • Dividend Payout: 14.5%
  • PE Ratio: 15.91
  • 5 Year Dividend Growth Rate: 19%
  • Dividend Increase Streak: 12 years

While the initial dividend yield is extremely low, ATD has been growing its dividends at an impressive rate. For me, I think ATD is a great Canadian dividend stock to hold if you want something defensive and your investment timeline is long.

ATD has almost 40 years of experience so the company is always looking to customer behaviour changes.

Alimentation Couche-Tar is planning to add EV charging stations at its convenience store locations in the US, Canada, and Norway. This kind of rollout wouldn’t be possible without a vast network of retail stores.

3. Manulife (MFC.TO)

Manulife Financial Corporation is the largest insurance company in Canada and the 28th largest fund manager in the world. Many Canadians use Manulife’s products as it is a Canadian multinational insurance company and financial services provider. Manulife operates outside of Canada as well. In Asia it operates under the same Manulife name; in the US the company primarily operates through its John Hancock Financial division.

  • Sector: Financial
  • Dividend Yield: 5.15%
  • Dividend Payout: 32.4%
  • PE Ratio: 7.25
  • 5 Year Dividend Growth Rate: 9.6%
  • Dividend Increase Streak: 8 years

Manulife has more than 125 years of experience and serves over 26 million customers. Manulife was one of the first dividend stocks that I purchased when I first started with DIY investing.

Best Canadian dividend stocks - Manulife (Manulife Investment)
Manulife Investment Management

Given interest rates will start to go up in the next couple of years to dampen inflation rate, an insurance company like Manulife should and will benefit from the rising interest rates.

4. Enbridge (ENB.TO)

Enbridge is one of the leading North American infrastructure companies with a vast network of pipelines. In fact, Enbridge owns an extensive network of about 192,000 miles of natural gas and NGL pipelines across North America and the Gulf of Mexico.

Best Canadian dividend stocks - Enbridge business model

Since our reliance on natural gas and crude oil isn’t going away anytime soon, we will need to continue to rely on Enbridge’s pipelines to transport these valuable assets across North America. Environmental concerns and the inability to build new pipelines means Enbridge’s existing pipeline network is even more valuable than before.

  • Sector: Energy
  • Dividend Yield: 6.1%
  • Dividend Payout Ratio: 121%
  • PE Ratio: 18.71
  • 5 Year Dividend Growth Rate: 9.5%
  • Dividend Increase Streak: 26 years

From Enbridge’s annual presentation below, the company has a history of long term value creation for its shareholders. The Enbridge management expects a 5-7% dividend growth rate moving forward. Given the high yield already, this kind of dividend growth rate is pretty decent.

Best Canadian dividend stocks - Enbridge

For investors looking for income, Enbridge is a great choice. It definitely falls under the high yield low growth category.

5. Algonquin Power & Utilities Corp (AQN.TO)

Algonquin Power & Utilities Corp. is a diversified Canadian renewable energy and regulated utility conglomerate with assets across North America. Algonquin actively invests in hydroelectric, wind and solar power facilities, and utility businesses (water, natural gas, electricity), through its two operating subsidiaries: Liberty Power and Liberty Utilities.

  • Sector: Utilities
  • Dividend Yield: 4.756% 
  • Dividend Payout Ratio:  70.5%
  • PE Ratio: 20.05
  • 5 Year Dividend Growth Rate: 10.0%
  • Dividend Increase Streak: 11 years

I particularly like that Algonquin Power has been actively investing in renewable energy facilities and increasing its renewable capacity through active acquisitions. This is also why I included AQN.TO in the best Canadian utility stocks.

Best Canadian Dividend Stocks - AQN.TO

AQN share price has dropped quite a bit throughout 2020 and 2021 due to concerns with the company’s debt level. However, I think long term investors shouldn’t be worried. AQN is taking on debt for new projects and expanding its generating capacities. The stock price has recovered somewhat in recent months. We plan to continue buying AQN and take advantage of the discounted share price.

5. TD Bank (TD.TO)

Toronto-Dominion Bank is a Canada-based bank, which operates in North America. TD is one of the largest banks in Canada and the 5th largest bank in North America. It is an online financial services firm, with over 14 million online and mobile customers. Its segments include Canadian Retail, U.S. Retail, Wholesale Banking and Corporate.

  • Sector: Financial Services
  • Dividend Yield: 3.5%
  • Dividend Payout Ratio: 46.1%
  • PE Ratio: 12.34
  • 5 Year Dividend Growth Rate: 7.9%
  • Dividend Increase Streak: 11 years

TD doesn’t just generate its income from the Canadian market. In fact, TD gets more than 30% of its net income from the American division which has more than 1,250 retail locations in the US. Overall, TD has a very large retail presence in North America with more than 2,300 retail locations across the continent.

Do you know people that switch banks regularly? Probably not too many. Because people don’t change banks regularly, TD should continue to benefit from its large client base. Many young adults are TD clients because their parents bank with TD. Once these young adults have kids, it’s very likely they will set their kids up with TD for financial service. Who doesn’t like a perpetual client base?

6. Brookfield Asset Management (BAM.A)

Brookfield Asset Management is a leading global alternative asset manager with over $625 billion of assets under management across real estate, infrastructure, renewable power, private equity and credit. It is the parent company for the Brookfield subsidiaries like Brookfield Renewable, Brookfield Infrastructure, Brookfield Business Partners, etc. Brookfield Asset Management has operations in over 30 countries with approximately 150,000 operating employees.

  • Sector: Financial Services
  • Dividend Yield: 1.02%
  • Dividend Payout Ratio: 24%
  • PE Ratio: 218.57
  • 5 Year Dividend Growth Rate: 8.4%
  • Dividend Increase Streak: 10 years

Although the dividend yield is only 1%, BAM.A has an impressive share price appreciation history. Furthermore, Brookfield Asset Management’s share price has done really well with an impressive performance of +117% in the last five years.

7. Royal Bank (RY.TO)

Royal Bank is the largest bank in Canada with mover than 620,000 clients. If we look at Royal Bank’s earnings, 45% came from personal & commercial banking, 24% came from capital markets, 19% came from wealth management, 7% came from insurance, and 5% came from investor & treasury services.

RY serves personal, business, public sector and institutional clients in Canada, the United States and approximately 40 other countries.

  • Sector: Financial Services
  • Dividend Yield: 3.39%
  • Dividend Payout Ratio: 43.4%
  • PE Ratio: 12.61
  • 5 Year Dividend Growth Rate: 5.9%
  • Dividend Increase Streak: 11 years

Royal Bank has been paying dividends since 1870 and has never missed a dividend payment since. Let that sink in! The 150 year of dividend payment streak is pretty darn impressive if you ask me. Royal Bank raised its payout by 11% in December 2011 and given the solid dividend raise history, I expect RY to continue to raise dividends in 2022.

8. Granite REIT (GRT.UN)

Granite REIT is a Canadian-based real estate investment trust engaged in the acquisition, development, ownership management of logistics, warehouse and industrial properties in North America and Europe.

  • Sector: Industrial REIT
  • Dividend Yield: 3.2%
  • Dividend Payout Ratio: 18%
  • PE Ratio: 7.1 (for REITS, need to look at Price to FFO)
  • 5 Year Dividend Growth Rate: 4.4%
  • Dividend Increase Streak: 11 years
Best Canadian dividend stocks - Granite REIT tenants

GRT.UN’s portfolio consists of 118 investment properties representing almost 51.3 million square feet of leasable area with an occupancy rate of 99.6%. These numbers are very impressive for REITs. I have come to really like Granite REIT for its global footprint with a focus on institutional-quality assets in key distribution and e-commerce markets.

As online shopping gets more popular, online retailers like Amazon and Wayfair need to have warehouses in major cities to store merchandise. GRT.UN should benefit from this shopping trend.

10. Equitable Group (EQB)

Equitable Group serves a growing number of Canadian through Equitable Bank. Equitable Bank has grown over the years to become the eighty largest bank in Canada.

  • Sector: Financial Services
  • Dividend Yield: 1.48%
  • Dividend Payout Ratio: 13.7%
  • PE Ratio: 9.1
  • 5 Year Dividend Growth Rate: 12%
  • Dividend Increase Streak: 1 years

Equitable Group recently announced that it entered an agreement to purchase Saskatoon-based Concentra Bank for $470M. This is a great method for EQB to continue to grow and expand its customer base.

More significantly, EQB announced a whopping 51% dividend increase! With the low payout ratio, I expect EQB to continue to raise dividends at an impressive rate.

11. Telus (T.TO)

Telus is one of the big three Canadian telecommunication companies based in Vancouver BC. The Company provides a range of telecommunications services and products, including wireless and wireline voice and data. Telus has around 11 million subscribers and they have increased its dividend nearly every year since 2002.

  • Sector: Communication Services
  • Dividend Yield: 4.03%
  • Dividend Payout Ratio: 137%
  • PE Ratio: 26.12
  • 5 Year Dividend Growth Rate: 6.7%
  • Dividend Increase Streak: 18 years

Since the launch of smartphones and data plans, more and more Canadians are addicted to these smart devices. This addiction has helped Telus to continue making a massive amount of profit. Telus’ board is very shareholder friendly and has declared that they have a goal to continue increasing dividends by 7 to 10% in future years.

I like the fact that Telus is staying true to its core business and not expanding into the media business. This approach is very different than Telus’ two key competitors, Rogers and BCE.

12. Canadian National Railway (CNR.TO)

Canadian National Railway Company has a network of approximately 20,000 route miles of track spans Canada and mid-America, connecting approximately three coasts, including the Atlantic, the Pacific and the Gulf of Mexico and serving the cities and ports of Vancouver, Prince Rupert (British Columbia), Montreal, Halifax, New Orleans, and Mobile (Alabama), and the metropolitan areas of Toronto, Edmonton, Winnipeg, Calgary, Chicago, Memphis, Detroit, Duluth (Minnesota)/Superior (Wisconsin), and Jackson (Mississippi), with connections to all points in North America.

  • Sector: Industrials
  • Dividend Yield: 1.83%
  • Dividend Payout Ratio: 36.3%
  • PE Ratio: 22.72
  • 5 Year Dividend Growth Rate: 10.4%
  • Dividend Increase Streak: 26 years

CNR is a very diversified company. No one particular product line accounted for more than 25% of the total revenues. And the company has one of the lowest operation ratios of all American railway companies that are publicly traded.

Canadian National Railway has a pretty low dividend yield, but the key here is its high dividend growth rate over the years. The company currently has a 20 year dividend growth rate of 15.8%. So after holding CNR for a few years, you should see your cost on yield increase nicely.

Although rail is not frequently used for passenger travels here in North America, rail is still one of the most cost-efficient ways for transporting goods. Canadian National Railway’s large rail network will allow the company to provide transportation services in North America and bring profits to shareholders.

As a dividend investor who cares about both dividend growth and capital appreciation, I really like how CNR has consistently outpaced the market.

13. Canadian Natural Resources (CNQ.TO)

Canadian Natural Resources is a natural gas and heavy crude oil producer that operates primarily in Western Canada.

  • Sector: Energy
  • Dividend Yield: 3.88%
  • Payout Ratio: 47.4%
  • PE Ratio: 9.64
  • 5 Year Dividend Growth Rate: 16.3%
  • Dividend Increase Streak: 21 years

Why did I pick CNQ over other Canadian energy producers like Suncor or Imperial Oil? It’s because CNQ has shown consistently that it can weather the storm. It managed to keep the same dividend payout throughout the pandemic. In fact, CNQ raised dividends amidst the pandemic. This is a very different approach than what Suncor did.

Best Canadian dividend stocks - CNQ

With the crude oil price going higher and higher, Canadian Natural Resources should benefit from this trend. However, investors should keep in mind the cyclical nature of the energy sector.

13 Best Canadian Dividend Stocks – Final Thoughts

Here you have it, my picks for the best Canadian Dividend Stocks. I picked these stocks from different sectors to help build a diversified dividend portfolio. For the most part, investing in Canadian banks, Canadian utilities, and Canadian telecoms is a very easy and straight forward way of DIY investing and receiving juicy dividends.

Want to learn to construct your own dividend investing portfolio and start investing in dividend paying stocks? I went through several methods on how I shortlist and screen dividend paying stocks. You may also want to take a look at this Canadian Dividend Calendar to see when the Canadian dividend all stars pay out dividends.

Some of you might wonder if preferred shares have a place in your portfolio. This is a very personal question and totally depends on whether your aim is total return or dividend income. Personally, I think there are too many preferred shares available and it can be very confusing looking at preferred shares from the same company and understanding all the different jargon. Therefore, if you’re considering holding preferred shares in your portfolio, it might be a good idea to utilize one of the best preferred share ETFs in Canada and let the professionals manage it for you.

If you’re reading this post, you are probably managing your own portfolio and may not want to use an ETF and pay the management fee, is there a way to do that? Fortunately, some smart folks created Passiv to do that for you automatically. With Passiv, the tool can put your portfolio on autopilot. You can build your own personalized index, invest, and rebalance all through a click of a button. Passiv can even calculate and execute the trades needed to keep your portfolio balanced. Essentially, Passive makes investing super simple! A community user account is free to sign up for. The elite member account is $99 per year…but it’s free for Questrade clients! Make sure to check out Passiv.

In case you’re curious, for diversification outside of Canada, we hold a handful of US dividend paying stocks. In addition, we utilize one of the low cost ex-Canada ETFs like XAW to diversify our portfolio internationally.

Do you already own dividend stocks and want to create a spreadsheet to track your portfolio? Take a look at my Google Spreadsheet Dividend Portfolio Template.

The dividend-growth lovers over at Million Dollar Journey have their own list of Canada’s best dividend stocks, which focuses heavily on earnings-per-share, and forward earnings-per-share as their main dividend stock valuation metrics. This again, makes intuitive sense from a dividend-growth perspective, as companies that have a lot of free cash flow – plus a history of raising their dividends – should be ideally positioned to keep those dividends growing far into the future.

Is it better to purchase one of these top Canadian dividend stocks, or purchase lesser known Canadian dividend stocks with lower yield and higher dividend growth? This is a personal decision you need to make yourself. Personally, I believe a mix of both.

Note: This blog post represents my opinion and not an advice/recommendation to purchase these stocks. Before you buy any stocks, please consult with a qualified financial planner.

Share on:
.

149 thoughts on “13 Best Canadian Dividend Stocks for 2022”

  1. During the early days of the pandemic, I gobbled up ENB, KEY, PPL, BNS and a couple of retail REITS like a hungry man at a buffet table.

    I was eyeballing Cdn.Natural Resources as well but never got around to it.
    If I look at the chart now, CNQ is just too high for my liking – it looks like it could crash down at any moment, especially if middle eastern countries start blasting up the oil supply.
    They have fantastic dividend growth rates no doubt, but I would be too nervous buying into it at these levels.
    I’m also more comfortable holding midstream oil&gas companies, rather than a front-liner susceptible to wild fluctuations.
    Having said that, I’m sure CNQ can repurpose when the time comes, just like ENB.

    As much as we’d all like to hug windmills and solar panels – the infrastructure just isn’t there to service all of us, like oil&gas still can.
    So I’m pretty confident these companies will be necessary for a couple decades to come.

    Thanks for your insights, I like all your choices – except for AQN.
    Their debt load just seems insane to maintain long-term dividend rates.
    I know it’s incredibly popular though and they certainly aren’t going to disappear anytime soon.

    Reply
  2. I’m quite disappointed in Telus International – they are growing , huge cash reserve and Earnings …but zero dividend !?. NOT the best. I would call this division – NOT shareholder friendly.

    Reply
    • Hello,
      I don’t own or follow TIXT but have owned T for many years and am happy with it. I believe TIXT was spun off by T to be a growth vehicle, not a dividend stock. It may have been priced to high to begin with, hence the decline since late October. The company is focused on retaining their earnings for growth. If dividends are your focus I wouldn’t suggest holding TIXT. There are better opportunity income opportunities elsewhere.

      Reply
  3. Hi,

    What do you think of the sustainability of the dividend for Telus? The payout ratio is rather high so I checked their website and it stated that they are using free cash flow instead of net income and targeting 60 to 75 percent. Not sure if I used the correct FCF number from their recent quarterly report, but I came up with a number even higher than the payout ratio that uses dividends paid/net income.

    I like your list and have positions in 7 of them with a few others that I’m looking to add. EQ bank looks interesting, but Wealthsimple does not let me buy it yet…guess volume is too low.

    Reply
    • Based on free cash flow analysis I think Telus’ dividend is safe. Telus management seems to be very shareholder friendly as they’ve been raising dividends quite consistently.

      That’s odd you aren’t able to buy EQB with Wealthsimple.

      Reply
  4. Healthy list ! I feel markets are over heated …too much stimulus, combined with near zero interest rates. There will be a pull back at some point . What the catalyst will be I don’t know, however if you look at history it tends to predict the future.

    Reply
  5. Great list of bluechip dividend stocks.
    I find the coverage on Savaria Corp interesting and also shows there are good stocks outside the bank/utility/energy/resource space. A small suggestion – if you could cover mid or small cap dividend stocks as a separate article it would be great and provide more idea or sectors to explore beyond the typical Canadian index heavyweight sectors. Thank you.

    Reply
      • So at least at BMO InvestorLine for ENB they do not offer Drip which might be per ENB policy, do any other discount brokers offer DRIP for ENB?

        Now have been taking the dividends from ENB to purchase no fee purchase of ETF XDV.

        I have shares of ENB, FTS, T which are in XDV already so may look into moving XDV to some individual stocks eventually.

        I guess I have some research to do as about 38% of the portfolio is XDV. ENB 21%, FTS 12%, T 22%, then rest is small amount of CRYP 2.73% & ETHY.B 2.53%.

        Reply
  6. Great list Bob.
    I have really been getting a lot out of your blog over the last 15 months or so. This post reaffirms for me that I am on the right track. I hold 12 of the 13 with a heavy weight to Financials and Utilities. Love the dividends I am seeing as my wife and I head into retirement…..Looking at $32,000 this years across all our accounts with a goal of $36,000 in 2022.

    Funny that the only one I am missing on your list is National Bank….your number 1. I will certainly be giving NA close look in the new year and adding to several others in 2022.

    All the best to you and your family over the holiday season.

    Reply

Leave a Comment

 

This site uses Akismet to reduce spam. Learn how your comment data is processed.