Best Canadian Dividend Stocks – My Top 10


If you look at our dividend portfolio, you will notice that majority of our portfolio consists of Canadian dividend stocks. Being a Canadian I am slightly biased when it comes to owning Canadian dividend stocks. Why do I like owning Canadian dividend stocks?

Two words – Exchange rate.

Purchasing Canadian dividend stocks does not involve in exchanging currency, so it is way easier to pull the buy trigger. Meanwhile, if we want to purchase US listed stocks, we either need to exchange CAD to USD using Norbert gambit, or wait until we receive enough dividend income in US currency. Needless to say, it is slightly more complicated to buy US listed dividend stocks.

By now, you should all know that stock market goes up and down on a daily basis. However, long-term, stock market has a tendency to increase in value. Therefore, I believe it is important to identify the 10 best Canadian dividend stocks so you can continue monitoring them and pull the buy trigger whenever there is a good buying opportunity.

Which 10 stocks made my best Canadian dividend stocks list?

Best Canadian Dividend Stocks – Top 10

Here are my top 10 list of best Canadian dividend stocks. One thing to note is that we own all of these stocks in our portfolio and have no plan to sell any of them. We plan to continue adding shares of these stocks in the future. We typically add shares to dividend stocks that we already own whenever there’s a pullback. For example, if there’s a 10% or 15% pullback within a short period of time, it usually makes sense to buy these dividend stocks. Afterall, we are investing for the long term, not short term.

1. Canadian Imperial Bank of Commerce (CM.TO)

Canadian Imperial Bank of Commerce (CIBC) is a global financial institution. The Company provides a range of financial products and services to approximately 11 million individual, small business, commercial, corporate and institutional clients in Canada and around the world. The Company operates through three segments: Retail and Business Banking, Wealth Management and Capital Markets.

  • Sector: Financial Services
  • Dividend Yield: 4.68%
  • Dividend Payout Ratio: 47.27%
  • PE Ratio: 10.10
  • 5 Year Dividend Growth Rate: 6.5%
  • Dividend Increase Streak: 6 years

CIBC has one of the highest dividend yields of all Canadian stocks with one of the lowest PE ratios. Both dividend payout ratio and 5 year dividend growth rate are healthy. CIBC has been paying dividends since the late 1800’s. The company currently high exposure in the Canadian domestic market compared to other major Canadian banks, but CIBC is trying to expand into the US market.

2. TD Bank (TD.TO)

Toronto-Dominion Bank is a Canada-based bank, which operates in North America. It is an online financial services firm, with over 10.2 million online and mobile customers. Its segments include Canadian Retail, U.S. Retail, Wholesale Banking and Corporate. TD is one of the largest banks in Canada.

  • Sector: Financial Services
  • Dividend Yield: 3.41%
  • Dividend Payout Ratio: 45.45%
  • PE Ratio: 13.32
  • 5 Year Dividend Growth Rate: 10.6%
  • Dividend Increase Streak: 6 years

I like TD as one of the best Canadian dividend stocks because of its readily available banking branches. You can easily spot TD branches walking around any major Canadian and US cities. Interestingly TD gets more than 30% of its net income from the American division, so the company does not rely on the Canadian division as heavily as some might have thought.

My parents opened up a chequing account for me with TD when I was a teenager. Since then I have opened TFSA with TD and used credit cards from TD Bank. When it comes to customer loyalty, most people are just like me. When they open an account with a particular bank, they tend to continue banking with this particular bank. More often than not, it’s not worth the hassle to switch your bank. This is why I like the banking sector so much.

3. Royal Bank (RY.TO)

Royal Bank of Canada (RBC), is a diversified financial services company. The Company provides personal and commercial banking, wealth management services, insurance, investor services and capital markets products and services on a global basis. The Company serves personal, business, public sector and institutional clients in Canada, the United States and approximately 40 other countries. The Company’s business segments include Personal and Commercial Banking, Wealth Management, Insurance, Investor and Treasury Services, Capital Markets.

  • Sector: Financial Services
  • Dividend Yield: 3.71%
  • Dividend Payout Ratio: 49.73%
  • PE Ratio: 13.40
  • 5 Year Dividend Growth Rate: 9.3%
  • Dividend Increase Streak: 6 years

Yet another Canadian banks on our 10 best Canadian dividend stocks (do you see a trend?). Royal Bank has been paying dividends since 1870 and has never missed a dividend payment since. Needless to say, the 247 years of dividend payment streak is pretty impressive.

4. Bank of Nova Scotia (BNS.TO)

The Bank of Nova Scotia is an international bank and a financial services provider in North America, Latin America, the Caribbean and Central America, and Asia-Pacific. The Bank offers a range of advice, products and services, including personal and commercial banking, wealth management and private banking, corporate and investment banking, and capital markets.

  • Sector: Financial Services
  • Dividend Yield: 3.92%
  • Dividend Payout Ratio: 49.22%
  • PE Ratio: 12.55
  • 5 Year Dividend Growth Rate: 7%
  • Dividend Increase Streak: 6 years

Bank of Nova Scotia is probably the most diversified Canadian bank out of the big five. It provides financial services not just in the Americas but Asia-Pacific as well. In fact, Bank of Nova Scotia has branches and have tens of millions of assets in Latin American, Europe, and Asia. It is a truly international bank.

5. Intact Financial (IFC.TO)

Intact Financial is an insurance company. It offers a range of car, home and business insurance products, including personal auto, personal property, commercial P&C and commercial auto.

Intact Financial was the very first Canadian dividend paying stock that I purchased many years ago. Since my purchase, Intact Financial has managed to raise its dividend payments every year. Best of all, the stock price has increased significantly since, making me a happy shareholder.

  • Sector: Financial Services
  • Dividend Yield: 2.49%
  • Dividend Payout Ratio: 50.39%
  • PE Ratio: 20.25
  • 5 Year Dividend Growth Rate: 9.4%
  • Dividend Increase Streak: 12 years

At PE ratio above 20, I think the stock is a bit over priced. I believe the high PE ratio is caused by the market putting a slight premium on this particular stock.

With the pending interest rate increases, insurance companies like Intact Financial will benefit. Historical data has shown that insurance stocks tend to flourish as rates rise. This is because insurance companies typically invest money that they receive from policyholders in bonds. When interest rate increases, this allows insurance companies to generate higher yields and earn higher investment income on the premiums that they receive from policyholders. In addition, the higher interest rate allows insurance companies to offer insurance products with more attractive/higher yields. This would in term brings in more premiums to the company, which can then be invested.

I personally think that the insurance companies will do quite well in the next few years.

6. Saputo (SAP.TO)

Saputo produces, produces, markets and distributes dairy products, including cheese, fluid milk, extended shelf-life milk and cream products, cultured products and dairy ingredients. The Company has three geographic sectors. The Canada Sector consists of Dairy Division (Canada). The USA Sector aggregates the Cheese Division (USA) and the Dairy Foods Division (USA). The International Sector combines the Dairy Division (Argentina), the Dairy Ingredients Division and the Dairy Division (Australia).

Saputo’s products are sold in several countries under well-known brand names such as Saputo, Alexis de Portneuf, Armstrong, COON, Cracker Barrel, Dairyland, DairyStar, Friendship Dairies, Frigo Cheese Heads, La Paulina, Milk2Go/Lait’s Go, Neilson, Nutrilait, Scotsburn, Stella, Sungold, Treasure Cave and Woolwich Dairy. Maybe you aren’t aware of the name Saputo, but you probably are aware of one of these brand names mentioned above.

  • Sector: Consumer Defensive
  • Dividend Yield: 1.48%
  • Dividend Payout Ratio: 33.68%
  • PE Ratio: 22.74
  • 5 Year Dividend Growth Rate: 14.9%
  • Dividend Increase Streak: 12 years

For Canadians, we are probably most familiar with the Dairyland brand. I like Saputo’s business because many Canadians use dairy products on a daily basis. Furthermore, Saputo is one of the few Canadian dividend paying stocks that fall under the consumer defensive sector. If you are looking for diversification, Saputo may be a good stock to own.

7. 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 13 million subscribers and they have increased its dividend nearly every year since 2002.

  • Sector: Communication Services
  • Dividend Yield: 4.38%
  • Dividend Payout Ratio: 93.33%
  • PE Ratio: 21.48
  • 5 Year Dividend Growth Rate: 10.8%
  • Dividend Increase Streak: 13 years

Canadians are addicted to smartphones and data. This will allow Telus to continue making a massive amount of profit. The high payout ratio is a bit concerning though. This is an indication that Telus’ revenue growth has slowed compared to its dividend growth. It is highly possible that Telus’ dividend growth rate will slow down over the next few years, unless Telus can increase revenue growth. This is why Telus is exploring other telecommunication services to growth its revenue.

Another thing note is that Telus board of directors appears to be very shareholder friendly as they announced a number of years ago their dividend growth policy – to target “ongoing semi-annual dividend increases, with the annual increase in the range of 7 to 10% from 2017 through to the end of 2019.” As a dividend growth investor, that’s music to my ears.

8. Fortis (FTS.TO)

Fortis Inc. is a Canada-based electric and gas utility holding company. The Company’s segments include Regulated Utilities and Non-Regulated Utilities.

  • Sector: Utilities
  • Dividend Yield: 3.47%
  • Dividend Payout Ratio: 70.48%
  • PE Ratio: 20.35
  • 5 Year Dividend Growth Rate: 5.6%
  • Dividend Increase Streak: 43 years

I see Fortis’ dividend payments like bond interest payments. Many Canadians use natural gas or electricity to heat their home during winter, or use natural gas or electricity for cooking purposes, making Fortis a very stable stock to own.

9. Canadian National Railway (CNR.TO)

Canadian National Railway Company is engaged in the rail and related transportation business. The Company’s 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: 1.64%
  • Dividend Payout Ratio: 32.22%
  • PE Ratio: 19.73
  • 5 Year Dividend Growth Rate: 18.2%
  • Dividend Increase Streak: 21 years

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

Canadian National Railway has a pretty low dividend yield, but the company has relatively high dividend growth rate over the last 5 years. Although rail is not frequently used for passenger travels here in North America, rail is still the most efficient way for transporting goods. Canadian National Railway’s large rail network will allow the company to provide transportation services in North America and bringing profits to shareholders.

If we look at CNR’s 10-year dividend growth history, Canadian National Railway has raised dividends on average by 20%. This is an impressive feat. The overall stock dividend yield has been below 2% the last 10 years. This means, if you had purchased the stock 10 years ago, you would be looking at a heafy stock price appreciation as well as a solid yield on cost number.

10. Suncor (SU.TO)

Suncor Energy Inc. (Suncor) is an integrated energy company. The Company is focused on developing Canada’s petroleum resource basin, Athabasca oil sands. The Company operates in three business segments: Oil Sands, Exploration and Production (E&P), and Refining and Marketing.

  • Sector: Energy
  • Dividend Yield: 3.04%
  • Dividend Payout Ratio: 79.01%
  • PE Ratio: 26.02
  • 5 Year Dividend Growth Rate: 22%
  • Dividend Increase Streak: 14 years

Suncor recently acquired Canadian Oil Sand to increase its exposure to oil sands. The acquisition made Suncor the fifth largest North American energy company and one of the largest energy companies in the world. Suncor is currently facing some headwinds due to the low oil price. However, I believe its revenues should go up when oil price recovers.

An interesting thing when it comes to Suncor is its strong presence in the upstream, midstream, and downstream part of the oil supply chain. This is very different than many of the energy producers.

For long-term dividend growth investors, I believe Suncor is a well managed Canadian company. One thing to keep in mind is the energy sector is very cyclical and is prone to crude oil price. Having said that, I don’t see humans moving away from the dependency on crude and oil. Suncor should continue making profits thanks to this human dependency.

Final Thoughts

Outside of the Canadian banks, most of these top Canadian dividend stocks have relatively high PE ratio. This indicates that some of these stocks are currently over-valued. It is worthwhile to wait for price pullbacks. Some of these top Canadian dividend stocks listed above have payout ratios higher than 70%. This is a sign that these companies’ future dividend growths may slow down.

The math behind this correlation of high payout ratios and future dividends is fairly straight forward. If a company fully matured, and it is unlikely to a high jump in the share price (likely to just rise with inflation), plus they are already paying out much of their free cash flow (instead of reinvesting it to create value), then it follows there will be much less fiscal room to reward investors going forward.  

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 top Canadian dividend stocks listed above and some lesser known Canadian dividend stocks is a great strategy.

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

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.

Written by Tawcan
Hi I’m Bob from Vancouver Canada, I am working toward joyful life and financial independence through frugal living, dividend investing, passive income generation, life balance, and self-improvement. This blog is my way to chronicle my journey and share my stories and thoughts along the way. Stay in touch on Facebook and Twitter. Or sign up via Newsletter