Dividend Investing: Top Canadian Dividend Stocks of 2022 (2023)

Dividend stocks are stocks that pay you for investing in them. The amount you receive is based on the stock’s dividend yield and value.

For instance, a 4% yield with a $12 share price results in $0.48 per share. Having a diversified holding of dividend stocks is one of the best ways to earn passive income. Dividend stocks can have the double benefit of appreciating in value like other stocks.

Many dividend stocks are large-cap, blue-chip companies with positive cash flow, an established brand, and reliable revenue. For that reason, they’re typically less volatile than other stocks, such as growth and small caps.

While dividend stocks might not appreciate significantly over time, they can provide a stable and growing income stream, which could be ideal for risk-averse investors or those nearing retirement.

Of course, dividend stocks are investments, and, as such, they do have some risks. To help you pick the right dividend stocks for your portfolio, here’s a crash course in dividend stock investing.

What are dividend stocks?

Dividend stocks are shares of publicly traded companies that distribute regular payments to stockholders. These regular payments are called “dividends,” and they’re paid out on a periodic basis, such as quarterly, semi-annually, or annually.

Yes, this type of stock literally pay you for investing in them. Not only do dividend stocks pay out a portion of the company’s profits, but the stock itself can appreciate over time. This double whammy of dividends and stock price appreciation can lead to some major gains for stockholders.

The best dividend stocks will give you predictable payments, which can become a reliable source of passive income. Of course, dividend payouts can change, especially if the company or the economy itself starts to falter. But with a diversified dividend portfolio, you could receive payouts with a higher degree of certainty.

How do dividend stocks work?

To understand how dividend stocks work, let’s look at an example.

Let’s say you own 100 shares of a dividend stock, with each share worth $12. The dividend stock has a 4% yield and pays out annually, which means you get 4% of $12 multiplied by your total holding each year. That comes out to around $0.48 per share, or $48 for your 100 shares.

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That might not seem like a lot. But let’s assume you have $10,000 to invest with, and you choose the dividend stock above. Your $10,000 can buy around 833 shares.

If the yield and value hold steady, you can earn around $400 per year. That’s a good amount of passive income!

Once you receive your dividend payment, you can do a number of things. You could choose to reinvest your dividend into the company, expanding your shareholding, or you could buy stock of another company. Of course, you could also choose to save the money, or spend it, whichever fits your liking.

Top high dividend stocks in Canada

By focusing on strong, solid companies that regularly increase dividends, a small sum of money could grow into something significant.

Let’s look at the top Canadian dividend stocks in order of highest market cap (as of July 19, 2022).

Some of the best Canadian dividend stocks to consider as investments include:

Dividend Stock

Market Cap

Dividend Yield

Description

Fortis (TSX:FTS)

$30 billion

3.38%

Utility company serving 3.4 million customers.

BCE Inc. (TSX:BCE)

$63 billion

5.25%

Wireless and internet provider with roughly 10 million customers.

Enbridge (TSX:ENB)

$118 billion

6.06%

Midstream oil company that transports 30% of oil produced in North America.

1. Fortis

Fortis is an electric and gas company that operates 10 utility transmission and distribution assets between Canada and the United States, worth around $58 billion. It also has electricity generation assets in the Caribbean.

Fortis gets around 99% of its revenue from regulated assets, so you can trust its cash flow is predictable.

As far as dividend yield, the company doesn’t boast the highest yield in Canada. But because the company’s services are necessities (everyone needs electricity), you can trust the dividend will hold steady.

Even at a lower rate, Fortis has raised its yield for 48 years straight. Not only that, but Fortis has plans to expand its utilities operations through more acquisitions and new capital projects, all of which will help it raise dividend yields by 6% annually at least through 2025.

(Video) Top 10 Best Canadian Dividend Stocks Of All Time

2. BCE Inc.

BCE Inc. is one of Canada’s largest wireless and internet service providers, whose 10 million customers make up around 30% of the national market.

Not only does it dominate the telecommunications sector, but it also has a media segment, which provides news and entertainment through radio, television, and digital media.

The company is rapidly expanding into 5G technology, which is helping to sustain its upward growth. Right now, the company pays an attractive dividend of 5.25% percent, and for 14 consecutive years, it’s raised its dividend by 5% or more.

3. Enbridge

Enbridge is a massive midstream oil company that transports around 30% of the oil produced in North America.

The company’s pipelines include a natural gas pipeline system, regional oil sands pipelines, and a regulated natural gas utility system. It has even stretched into renewables, reinvesting money into wind and solar energy projects.

The dividend yield on Enbridge is impressive—a whopping 6.06%. The company is now in its 27th year of increasing dividends, too, which is a good sign to investors.

How to invest in Canadian dividend stocks

When you look at a list of Canadian dividend stocks, you’ll immediately notice one thing: it’s long and constantly growing. That’s not a bad thing, but it can make choosing the best Canadian dividend stocks feel daunting.

To help you pick dividend stocks, here are a few steps to get started.

1. Start with companies you know

When you look at history’s most successful investors, such as Warren Buffett and Peter Lynch, you’ll notice a trend: they always invest in companies they understand. And when it comes to whittling down your list of dividend stocks, it might be useful to eliminate companies you’re not familiar with.

Of course, familiarity doesn’t just mean that you recognize the brand. You might know Fortis by name, but if you don’t know its business model, or how it makes money, then you don’t really know Fortis all that well.

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On the other hand, if you’re familiar with the gas and electric industry as a whole, then you might be better equipped to understand the individual company, Fortis, that makes up a large part of it.

So take a look at the list below (or any list of dividend stocks for that matter) and identify a few that you’re already familiar with. This will help you get a head start on your research.

2. Research past performance

Once you’ve identified a few dividend companies that you know well, next you’ll want to dive into their dividend history.

At this stage, you’re looking for stocks that have had a strong performance over the long run, which includes upward stock appreciation and regular dividend increases. You might also want to look for stocks that have low volatility (beta numbers could help you here), as well as large market capitalizations.

Basically, you want to be sure the dividend company is going to keep paying out regular dividends, even during recessions.

You also want to check the company’s revenue and earnings growth: steady earnings over long periods of time (as opposed to erratic ones) are a good sign the company has a solid financial footing.

3. Look at the payout ratio

A dividend payout ratio is the percentage of a company’s earnings that’s paid out to stakeholders as dividends. For example, if a company earns $500 million this year and it pays $300 million to shareholders as dividends, then the dividend payout ratio would be 60%.

Of course, you might think the higher the payout ratio, the better. But that’s not always the case. If a company is dishing out 75% or more of its earnings to shareholders, then the dividend might not be sustainable over the long run. Some very large-cap companies can sustain high payout ratios, but smaller companies could risk overextending themselves.

An ideal payout ratio is around 60%. This means the dividend is likely sustainable and should continue to be paid out over the years you hold the stock.

4. Check the yield

Dividend yield is the percentage of a stock’s price that a company pays to shareholders each year. For instance, if a stock trades for $100 per share today and the company gives $4 per share, then the dividend yield would be 4%.

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Dividend yield is important, but it shouldn’t be the only factor that attracts you to certain dividend stocks. Yields often change over time, especially due to market fluctuations and economic disruptions.

While having a stock with a high yield can help you earn more passive income now, you also want that stock to be a strong business that will weather market downturns.

Do all stocks pay dividends?

No, not all stocks pay dividends.

Typically, dividends are paid out by large, well-established companies that have the money to pay back investors. Often, these companies have grown so big, they no longer reinvest money in themselves.

This is different from, say, growth stock companies that reinvest huge amounts of capital in their expansion, research, and product development (growth stocks often don’t pay a dividend).

Are dividend stocks right for you?

Dividend stocks are great long-term investments that can provide a stable stream of passive income. Though they might seem ideal for near retirees or risk-averse investors, they can benefit any type of investor, even if they appreciate at a slower rate.

Of course, like other stocks, dividends can experience volatility over short periods of time, which is why you want to research companies upfront to be sure you’ve chosen one wisely.

Great dividend companies follow some clear characteristics. They have a long history of increasing their dividends, while not cutting yields during hard economic times. They’ve also established themselves in their respective industries, becoming businesses and brands that consumers almost can’t live without.

Investors who aren’t interested in researching and choosing individual dividend stocks for investments may seek to invest in dividend mutual funds or dividend exchange-traded funds (ETFs).

These funds hold a bundle of dividend stocks within one investment, and they’ll distribute dividends to investors from that holding.

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Some examples of dividend ETFs include:

  • Vanguard FTSE Canadian High Dividend Yield Index ETF (TSX:VDY)
  • iShares S&P/TSX Composite High Dividend Index ETF (TSX:XEI)
  • BMO Canadian Dividend ETF (TSX:ZDV)

Frequently Asked Questions

Dividends are paid out quarterly, semi-annually, or annually. Sometimes companies will pay out a “special” dividend throughout the year, which is like a “one-off” payment to investors. As far as how you’ll receive your dividend, it depends on your stock. Many companies will mail cheques to stockholders, though many will also allow you to buy stock with dividend payouts.

Yes, dividends are considered taxable income. Even if the payout is reinvested or left within your account, you will be taxed. The good news is that Canada has a dividend tax credit that significantly lowers how much you’ll owe for dividends received from Canadian stocks. How much you pay in taxes will depend on your province, so it’s always best to consult a tax pro to understand how much you owe. Note: you’re not responsible for paying taxes if your dividend stock is kept in an RRSP or TFSA, at least not while the money remains in those accounts.

FAQs

What are the best Canadian dividend stocks to buy now? ›

What are the best dividend stocks in Canada?
  • Metro (TSE:MRU)
  • Canadian Apartments REIT (TSE:CAR.UN)
  • Canadian Natural Resources (TSE:CNQ)
  • TC Energy (TSE:TRP)
  • Alimentation Couche-Tard (TSE:ATD)
  • Royal Bank of Canada (TSE:RY)
  • BCE (TSE:BCE)
  • Fortis (TSE:FTS)
14 Nov 2022

Which company gives highest dividend in 2022? ›

Vedanta Ltd. – The company gave ₹77.5 as dividends in the last one year and its current share price stands at ₹292.55. Therefore it has had a 26.5% dividend yield in the year 2022.

What TSX stocks pay the highest dividend? ›

Top Dividend
RankingsSymbolDIVIDEND YIELD
1PUMA119.05 %
2ITE63.13 %
3FBT34.72 %
4ETHY31.02 %
46 more rows

What are the five best dividend stocks to buy? ›

Or at least that has been true for the top-rated Dow dividend stocks thus far in 2022.
...
  1. Home Depot.
  2. Coca-Cola. ...
  3. Merck. Market value: $242.4 billion. ...
  4. Goldman Sachs. Market value: $111.0 billion. ...
  5. Chevron. Market value: $339.0 billion. ...
26 Oct 2022

What is the best stock to buy in 2022 Canada? ›

10 Top TSX Stocks for November 2022 (Smallest to Largest)
  • Northland Power, $9.2 billion.
  • Fortis, $25.4 billion.
  • Franco-Nevada, $35.8 billion.
  • Constellation Software, $42.4 billion.
  • Shopify, $67.7 billion.
  • Canadian Natural Resources, $91.7 billion.
  • Brookfield Asset Management, $101.1 billion.
  • Enbridge, $118.5 billion.
15 Nov 2022

What are the best Canadian stocks to buy right now? ›

The S&P/TSX Composite Index consists of 237 of the best Canadian stocks traded on the Toronto Stock Exchange.
...
7 Best Canadian Stocks to Buy Now.
TIXTTelus International$30.13
STNStantec$49.13
DOOOBRP$71.08
RBARitchie Bros. Auctioneers$68.46
TFIITFI International$104.59
2 more rows
12 Sept 2022

What stock has the highest dividend return? ›

Comparison Results
NamePriceDividend Yield
T AT&T$19.127.08%
XRX Xerox$15.916.35%
IBM International Business Machines$148.374.42%
CVX Chevron$183.703.04%
5 more rows

What is the highest paying dividend stock that pays monthly? ›

High-Yield Monthly Dividend Stock #4: Ellington Residential Mortgage REIT (EARN) High-Yield Monthly Dividend Stock #3: AGNC Investment Corporation (AGNC) High-Yield Monthly Dividend Stock #2: Broadmark Realty Capital (BMRK) High-Yield Monthly Dividend Stock #1: ARMOUR Residential REIT (ARR)

Which share is best for dividend? ›

Highest Dividend Yield Shares
S.No.NameCMP Rs.
1.REC Ltd109.05
2.Banco Products200.25
3.Standard Inds.26.95
4.Natl. Aluminium75.40
22 more rows

What are the safest Canadian dividend stocks? ›

The composition of the portfolio is as follows:
  • Bank of Nova Scotia - 15.7%
  • Bank of Montreal - 15.7%
  • Royal Bank of Canada - 15.4%
  • Canadian Imperial Bank of Commerce - 15.4%
  • Toronto-Dominion Bank - 15.3%
  • National Bank of Canada - 14.7%
  • Brompton North American Financials Dividend ETF - 8.3%
17 Oct 2022

What dividend pays 100k a year? ›

You'll need to build your portfolio up to at least $1 million to make $100,000 each year through dividend investing. Conservative options trading will give you more capital to invest into more dividend stocks and get you closer to the 6-figure goal.

What 10 stocks pay the highest dividends? ›

High-dividend stocks
  1. V.F. Corporation (VFC) ...
  2. Devon Energy (DVN) ...
  3. Dow Inc. ...
  4. Best Buy (BBY) ...
  5. Verizon Communications (VZ) ...
  6. AT&T (T) ...
  7. Intel (INTC) ...
  8. Philip Morris International (PM)
28 Oct 2022

What stock has the most potential to grow in 2022? ›

  • Bank of America's Best Growth Stocks of 2022.
  • Amazon.com, Inc. ( AMZN)
  • Constellation Energy Corp. ( CEG)
  • FleetCor Technologies (FLT)
  • Alphabet Inc. ( GOOG, GOOGL)
  • Halliburton Co. ( HAL)
  • Johnson Controls International (JCI)
  • Meta Platforms Inc. ( FB)
1 Nov 2022

Which stock will give good returns in 2022? ›

Best Stocks to Invest in 2022
  • Reliance Industries.
  • Tata Consultancy Services.
  • HDFC Bank.
  • Infosys.
17 Nov 2022

Where should I invest my money in 2022 Canada? ›

Among the investment solutions that could bring you money in 2022, these are among the most interesting financial products:
  • Stocks.
  • ETFs (exchange-traded funds)
  • Mutual funds.
  • Real estate.
  • Cryptocurrencies.
  • Gold.
  • Income trusts.

What are the 10 best stocks to own right now? ›

Top 10 Stocks To Buy Right Now
  • Ford Motor Company (NYSE: F)
  • Alphabet Inc. (NASDAQ: GOOG)
  • Amazon.com, Inc. (NASDAQ: AMZN)
  • The Walt Disney Company (NYSE: DIS)
  • Palo Alto Networks, Inc. (NASDAQ: PANW)
  • The Boeing Company (NYSE: BA)
  • Prologis, Inc. (NYSE: PLD)
  • Johnson & Johnson (NYSE: JNJ)
21 Nov 2022

What are the safest stocks to buy in Canada? ›

In Canada, some top dividend stocks include: Procter & Gamble Pembina Pipeline Brookfield Infrastructure Partners Fortis Inc. Polaris Infrastructure [KevelPitch/] Check back here for the most up to date information about dividend stocks in Canada. Energy StocksWhat are energy stocks?

What are the top 5 shares to buy today? ›

Stocks to Buy Today: Best Shares to Buy in India
NameLTPChg.(%)
Bharti Airtel846.85-0.18
Britannia Inds.4,183.70-0.18
Cipla1,105.350.91
Coal India231.401.27
11 more rows

Can you get rich with dividend stocks? ›

Can an investor really get rich from dividends? The short answer is “yes”. With a high savings rate, robust investment returns, and a long enough time horizon, this will lead to surprising wealth in the long run. For many investors who are just starting out, this may seem like an unrealistic pipe dream.

Do you pay taxes on dividends? ›

In most cases, dividend income is taxable. Taxpayers will often receive a Form 1099-DIV for all dividends in excess of $10 or more earned from any single entity. In addition, taxpayers must report this income on Schedule B of their Federal tax return if they've received over $1,500.

How do I make 1k a month in dividends? ›

In a market that generates a 2% annual yield, you would need to invest $600,000 up front in order to reliably generate $12,000 per year (or $1,000 per month) in dividend payments.

How many dividend stocks should I own? ›

Overall, we believe creating a dividend portfolio with 20 to 60 stocks provides a reasonable balance between the need for diversification, a desire to keep trading activity low, and a limited amount of research time to devote to maintaining a portfolio.

When should I buy a high dividend stock? ›

You should consider buying dividend-paying stocks whenever you start investing to reap their long-term benefits. Dividend stocks, especially those in companies that consistently increase their dividends, have historically outperformed the market with less volatility.

Which companies will give dividend in 2022? ›

10 Highest Dividend-Paying Stocks in India Recently: Performance Overview
  • 1) Britannia Industries.
  • 2) Balkrishna Industries.
  • 3) Punjab National Bank.
  • 4) Dalmia Bharat.
  • 5) Polycab India.
  • 6) Dr Lal PathLabs.
  • 7) Supreme Industries.
  • 8) Union Bank of India.
17 Nov 2022

What dividends are tax free Canada? ›

Eligible Dividends

AMT starts when the dividends reach $54,403 (2021 $53,810). Federal AMT is applicable for dividends above this amount, until the amount of the dividends reaches $161,215 (2021 $154,860), when the regular federal tax equals or exceeds the minimum amount.

How much dividends does $1 million dollars make? ›

First of all, a million-dollar dividend portfolio will typically pay between $30,000 and $50,000 in dividends each year. Or, between $2,500 and $4,167 in dividends per month. What is this? This is because there are many quality stocks with good dividend yields between 3% and 5%.

How much does Warren Buffett make in dividends? ›

Since taking over the role as CEO in 1965, he's led Berkshire Hathaway's Class A shares (BRK. A) to an aggregate return of 3,641,613% as of the end of 2021. For those of you keeping score at home, this works out to an average annual return of 20.1% over 57 years.

How do you turn $100000 into passive income? ›

If you want IRS-type passive income, rental real estate is one of the most popular ways to generate passive income. You may be able to purchase a small property in a low-cost market outright for your $100,000. Or you could your cash as a down payment on a pricier property.

What is the best dividend stock to invest in? ›

Exxon Mobil Corp. (ticker: XOM)
  • Realty Income Corp. ( O) ...
  • Northrim BanCorp Inc. ( NRIM) ...
  • Dow Inc. ( DOW) ...
  • Citigroup Inc. ( C) ...
  • Suncor Energy Inc. ( SU) ...
  • Banco de Chile (BCH) Banco de Chile is one of Chile's largest commercial banks. ...
  • Pinnacle West Capital Corp. ( PNW) ...
  • 15 of the best dividend stocks to buy for 2022: ,
14 Oct 2022

How can I get 1000 a month in dividends? ›

In a market that generates a 2% annual yield, you would need to invest $600,000 up front in order to reliably generate $12,000 per year (or $1,000 per month) in dividend payments.

Which stock give the best dividend? ›

Highest Dividend Yield Shares
S.No.NameCMP Rs.
1.REC Ltd100.05
2.Banco Products206.15
3.Standard Inds.26.60
4.Natl. Aluminium73.50
22 more rows

How much do I need to invest to live off dividends in Canada? ›

You can expect an investment portfolio to pay out dividends roughly between 1% to 6% of its value each year. At those dividend yields, you'd need a portfolio value between $100,000 and $600,000 to make $500 per month in dividends.

What is the highest paying monthly dividend stock? ›

Top monthly dividend stocks for 2022
Monthly Dividend StockTicker SymbolDividend Yield
LTC Properties(NYSE:LTC)6.3%
Pembina Pipeline(NYSE:PBA)7.9%
Realty Income(NYSE:O)4.3%
SL Green(NYSE:SLG)5.2%
4 more rows

How to find good dividend stocks? ›

If you plan to invest in dividend stocks, look for companies that boast long-term expected earnings growth between 5% and 15%, strong cash flows, low debt-to-equity ratios, and industrial strength.

What is the fastest way to grow dividend income? ›

  1. Invest New Cash In Dividend-Paying Stocks To Increase Dividend Income. ...
  2. Receive Dividend Increases To Increase Dividend Income. ...
  3. Reinvest Your Dividends To Increase Dividend Income. ...
  4. Swap Lower-Yielding Stocks For Those With Higher Dividend Yields To Increase Dividend Income. ...
  5. Practice Dollar-Cost Averaging.

What is a good dividend portfolio? ›

You Can Build a Dividend Portfolio for Regular Income

Hold between 20 and 60 stocks to reduce company-specific risk. Roughly equal-weight each position. Invest no more than 25% of your portfolio in any one sector. Target companies with Safe or Very Safe Dividend Safety Scores™

Which dividends pay out monthly? ›

  • Realty Income (O) ...
  • SL Green (SLG) ...
  • STAG Industrial (STAG) ...
  • AGNC Investment (AGNC) ...
  • Apple Hospitality REIT (APLE) ...
  • EPR Properties (EPR) ...
  • Agree Realty (ADC)
15 Nov 2022

How much dividend is tax free in Canada? ›

Eligible Dividends

AMT starts when the dividends reach $54,403 (2021 $53,810). Federal AMT is applicable for dividends above this amount, until the amount of the dividends reaches $161,215 (2021 $154,860), when the regular federal tax equals or exceeds the minimum amount.

How much do you need in dividend stocks to retire? ›

To earn dividends equal to something like four times the $17,420 poverty level for two people, a retiring couple would need approximately $3.5 million in stocks paying 2%. For most people, that will require a lot of discipline and self-sacrifice in order to save and invest starting from a young age.

Can I live off dividends before retirement? ›

Over time, the cash flow generated by those dividend payments can supplement your Social Security and pension income. Perhaps, it can even provide all the money you need to maintain your preretirement lifestyle. It is possible to live off dividends if you do a little planning.

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