In this article, we will take a look at some of the best dividend Canadian stocks for income investors.
Dividend stocks are favored by investors not only in the US but also internationally. Canadian dividend companies, known for their robust cash flows, steady dividends, and solid balance sheets, have been particularly popular. However, these stocks lost some appeal in recent years as investors shifted their focus to other asset classes. According to the Canadian Imperial Bank of Commerce, there is now a renewed interest in Toronto’s dividend-paying stocks, which had been overlooked for over two years. This resurgence is expected to grow as short-term interest rates in Canada continue to decline. An analyst at the bank, Ian de Verteuil, noted in a research report that the shift back to high-yielding equities, such as utilities, REITs, and communications, is just beginning.
If interest rates continue to decline, the team anticipates that Canadian investors will redirect approximately $220 billion (US$161 billion) into dividend-paying stocks, moving away from fixed-income products. During periods of higher interest rates in Canada, dividend-paying equities were largely overlooked as investors sought better returns in term deposits, high-interest savings account ETFs, and technology stocks. As a result, the S&P/TSX Composite High Dividend Index has underperformed compared to the broader Canadian and US markets in both 2023 and the early part of 2024, in terms of both price appreciation and total returns.
Also read: Early Retirement Portfolio: 10 Stocks to Live Off Dividends
The recent underperformance of dividend stocks contrasts with their historical resilience. According to a report by Morningstar, following the 2008 financial crisis, investors gravitated toward income-focused strategies, valuing the perceived safety they offered. In 2008, funds in the Canadian Dividend and Income Equity category experienced a 24% loss, significantly less than the 33% drop in the Canadian benchmark index. Similarly, in 2011, when the TSX fell over 8%, the average fund in this category declined by only 0.8%. The report further mentioned that since 2008, dividend-focused funds have excelled at protecting investors’ capital during market downturns, capturing just 65% of the downside. These funds have also performed well during market upswings, capturing 75% of the gains. From January 2008 to June 2015, this category outperformed the broader market, delivering an annualized return of 4.7% compared to 3.7% for the TSX.
Concentrating on higher-yielding Canadian stocks would involve increasing exposure to sectors already heavily represented in the index, particularly financials. To achieve high yields, analysts recommend directing investments toward utilities, REITs, telecommunications, and financial sectors. Ian de Verteuil advised that Canadian investors should maintain this shift into these sectors in the future. However, he pointed out that securing high yields in Canada is challenging, as the high-yield bond market is quite restricted. Here are some other remarks from the analyst:
“Canadian investors have always struggled to find yield. Unlike the US, there are very few options for ‘high’ nominal yield – there is no Canadian municipal bond market and the high-yield bond market north of the border is extremely narrow.”
While Canadian dividend equities present an attractive option for investors, analysts consistently recommend diversifying across various regions to optimize returns. Due to the tendency of dividend investing to result in a heavier concentration of financial and energy stocks—common in the domestic market—income-focused investors should ensure their portfolios are well-diversified and aligned with their income objectives. That said, we will take a look at some of the best dividend Canadian stocks for income investors.
Image by Steve Buissinne from Pixabay
Our Methodology:
For this article, we scoured the list of S&P/TSX Canadian Dividend Aristocrats Index, which includes Canadian companies with at least five years of dividend growth track records. From that list, we selected stocks that are traded on American stock exchanges and sorted them by the number of hedge fund holders in our database that also had positions in those companies at the end of Q3 2024. This means that these Canadian companies are the most famous among hedge fund investors. The companies mentioned below also have strong dividend histories and healthy balance sheets, which make them reliable investment options for income investors. The stocks are ranked in ascending order of the number of funds that have stakes in them as of Q4.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here)
10. TELUS Corporation (NYSE:TU)
Number of Hedge Fund Holders: 16
TELUS Corporation (NYSE:TU) is a Canadian IT company that mainly offers television, data, and internet services to its consumers. The company has numerous plans in place for its investors. It is expanding its advanced connectivity offerings, such as 5G and fiber optic networks, which are crucial for its long-term growth. In addition, TELUS has introduced new services like TELUS Smart Energy and TELUS Home View to attract a wider customer base and meet changing market demands.
TELUS Corporation (NYSE:TU) has been down by nearly 20% in the past 12 months due to interest rate fluctuations. However, the company reported strong earnings in the third quarter of 2024. It reported revenue of $3.66 billion, marking a slight increase of 0.02% compared to the same period last year and exceeding analysts’ expectations by $13.6 million. The results demonstrated the company’s ability to achieve sustainable and profitable growth, driven by its strategic emphasis on expanding high-margin customer segments, developing world-class broadband networks, and fostering a customer-centric culture. This strategy resulted in industry-leading total customer net additions of 347,000, including notable growth in mobile phone customers with 130,000 additions, a significant increase in connected devices with 159,000 net additions, and 58,000 net additions in fixed services.
TELUS Corporation (NYSE:TU) currently offers a quarterly dividend of C$0.4023 per share, having raised it by 3.4% in November 2024. This marked the company’s 27th consecutive year of dividend growth, which makes TU one of the best dividend Canadian stocks. Moreover, it has remained committed to returning value to shareholders over the years. The company paid approximately $21 billion in dividends since 2004. The stock has a dividend yield of 8.20%, as of January 10.
At the end of Q3 2024, 16 hedge funds tracked by Insider Monkey reported having stakes in TELUS Corporation (NYSE:TU), compared with 17 in the previous quarter. These stakes are worth $154.7 million in total. With over 3 million shares, Arrowstreet Capital was the company’s leading stakeholder in Q3.
9. Imperial Oil Limited (NYSE:IMO)
Number of Hedge Fund Holders: 22
Imperial Oil Limited (NYSE:IMO), a petroleum refining company based in Calgary, is primarily owned by ExxonMobil, which holds a 69.7% stake in the company. Over the past five years, the stock has significantly outperformed the TSX, soaring nearly 175% compared to the benchmark index’s 44% return. This performance was fueled by the company’s strong operational performance. In the most recent quarter, it reported the highest upstream production in over three decades and ongoing reductions in upstream unit cash costs. Additionally, the company achieved robust downstream utilization while successfully carrying out major planned turnaround activities at its Nanticoke and Strathcona refineries, all while maintaining safety standards.
In the third quarter of 2024, Imperial Oil Limited (NYSE:IMO) reported that Kearl achieved a production rate of 295,000 total gross oil-equivalent barrels per day, with the company’s share amounting to 209,000 barrels, matching its highest-ever third-quarter output. Cold Lake’s production reached 147,000 gross oil-equivalent barrels per day, driven by a strong initial ramp-up of the Grand Rapids project, showcasing impressive performance.
Imperial Oil Limited (NYSE:IMO) also remained resilient in terms of its cash position. The company’s operating cash flow for the quarter came in at approximately C$1.5 billion. It also returned C$322 million to shareholders through dividends.
On November 1, 2024, Imperial Oil Limited (NYSE:IMO) declared a quarterly dividend of C$0.60 per share, which was in line with its previous dividend. Overall, the company has been rewarding shareholders with growing dividends for the past 30 consecutive years, which makes IMO one of the best dividend Canadian stocks. The stock has a dividend yield of 2.49%, as of January 10.
The number of hedge funds tracked by Insider Monkey owning stakes in Imperial Oil Limited (NYSE:IMO) grew to 22 in Q3 2024, from 18 in the previous quarter. These stakes are worth over $186.3 million in total. Among these hedge funds, First Eagle Investment Management was the company’s leading stakeholder in Q3.
8. Royal Bank of Canada (NYSE:RY)
Number of Hedge Fund Holders: 22
Royal Bank of Canada (NYSE:RY) ranks eighth on our list of the best dividend Canadian stocks. The multinational financial services company and the largest bank in Canada offers a wide range of related services and products to its consumers. In the past year, the stock has surged by over 27.5% as the bank benefited a lot from higher interest rates in Canada. In addition, the acquisition of HSBC Canada, completed earlier this year, has begun to bolster RBC’s earnings, contributing an additional $265 million to its bottom line in the fourth quarter.
In the fourth quarter of 2024, Royal Bank of Canada (NYSE:RY) reported revenue of over C$15.07 billion, up from C$12.6 billion in the prior year period. Its net income for the quarter came in at C$4.22 billion, growing from C$3.9 billion in the same quarter last year. Personal Banking experienced a 9% increase in earnings, with the addition of HSBC Canada’s results contributing $133 million to the net income.
Royal Bank of Canada (NYSE:RY) maintained a strong capital position, with a CET1 ratio of 13.2%, which supported solid volume growth. Furthermore, it returned $8.1 billion to shareholders this year through common dividends and share buybacks. On December 4, the company declared a 4.2% hike in its quarterly dividend to C$1.48 per share. Through this increase, it stretched its dividend growth streak to 14 years. The stock’s dividend yield on January 10 came in at 3.45%.
As of the close of Q3 2024, 22 hedge funds tracked by Insider Monkey held stakes in Royal Bank of Canada (NYSE:RY), up from 21 in the previous quarter. The overall value of these stakes is more than $1 billion.
7. Manulife Financial Corporation (NYSE:MFC)
Number of Hedge Fund Holders: 22
Manulife Financial Corporation (NYSE:MFC) is a multinational insurance company and a financial services provider, based in Canada. Despite global economic challenges, the company achieved strong financial performance in 2024, fueled by significant growth in new business and notable results from its global wealth management segment, particularly in Asia. The company’s solid stock performance this year can be credited to its focus on digital innovation and expansion into high-growth markets. In Asia, Manulife has been working to diversify its product offerings and improve digital services to cater to the growing customer base. Recent efforts include the introduction of digital tools and mobile apps in key markets like Vietnam, Indonesia, and the Philippines.
In the third quarter of 2024, Manulife Financial Corporation (NYSE:MFC) reported core earnings of $1.8 billion, reflecting a 4% increase compared to the same period last year. Year-to-date, 70% of the company’s core earnings came from its highest-potential businesses, leading to a 14% rise in core earnings per share, excluding the impact of GMT. The company achieved a core return on equity (ROE) of 16.6%, demonstrating strong operational performance and disciplined capital allocation. Additionally, Manulife remained focused on managing expenses, reaching an expense efficiency ratio of 45.0% year-to-date, in line with its medium-term target of staying below 45%.
In the first nine months of 2024, Manulife Financial Corporation (NYSE:MFC) returned over $2 billion to shareholders through dividends and share repurchases. Moreover, the company has been growing dividends for the past 11 years, which makes MFC one of the best dividend Canadian stocks for income investors. Currently, it pays a quarterly dividend of C$0.40 per share and has a dividend yield of 3.73%, as of January 10.
Manulife Financial Corporation (NYSE:MFC) was a part of 22 hedge fund portfolios at the end of Q3 2024, the same as in the previous quarter, according to Insider Monkey’s database. The stakes held by these funds have a total value of over $395 million. With over 3.6 million shares, Arrowstreet Capital was the company’s leading stakeholder in Q3.
6. The Toronto-Dominion Bank (NYSE:TD)
Number of Hedge Fund Holders: 23
The Toronto-Dominion Bank (NYSE:TD) is a Canadian multinational banking and financial services company that offers a wide range of services to its consumers. Despite the challenges faced in recent years, TD continues to be a highly profitable bank. The company also maintains a strong capital position, which provides it with the ability to weather economic uncertainty or pursue strategic acquisitions in new markets. In the past six months, the stock is up by nearly 3%.
In the fourth quarter of 2024, The Toronto-Dominion Bank (NYSE:TD) reported revenue of C$14.9 billion, which showed a growth from C$14.1 billion in the same period last year. A significant development for the company this quarter was the resolution of its US AML matters, providing crucial clarity to its stakeholders. Remediation remains the top priority, and the company continues to make significant strides in addressing the issues. The company’s Canadian Personal and Commercial Banking segment reported a net income of C$1.8 billion, marking a 9% increase from the same period last year, driven by higher revenue.
On December 5, The Toronto-Dominion Bank (NYSE:TD) announced a 2.9% increase in its quarterly dividend to C$1.05 per share. This marked the company’s tenth consecutive year of dividend growth. With a dividend yield of 5.37% as of January 10, TD is one of the best dividend Canadian stocks on our list.
Insider Monkey’s database of Q3 2024 indicated that 23 hedge funds held stakes in The Toronto-Dominion Bank (NYSE:TD), up from 22 in the previous quarter. These stakes have a consolidated value of over $540.5 million. With more than 3.6 million shares, Arrowstreet Capital was the company’s largest stakeholder in Q3.
5. Thomson Reuters Corporation (NYSE:TRI)
Number of Hedge Fund Holders: 25
Thomson Reuters Corporation (NYSE:TRI) is a Canadian media company that provides news and information tools to professionals. The company is consistently investing in AI, with a focus on driving innovation across its portfolio and markets to serve its customers better. In 2024, its investment in AI has increased to over $200 million. The company continues to advance its “Build, Partner, Buy” strategy, launching several new AI product capabilities and enhancing CoCounsel, its professional-grade GenAI assistant. In addition, it has completed the strategic acquisitions of Safe Sign Technologies and Materia, which complement its product roadmap and accelerate the delivery of GenAI tools for professionals.
In the third quarter of 2024, Thomson Reuters Corporation (NYSE:TRI) reported revenue of $1.72 billion, which saw an 8% growth from the same period last year. Its operating profit for the quarter fell by 6% on a YoY basis to $415 million. The company’s Legal Professionals segment remained the winner, generating $745 million in revenues, which grew by 8% from the same quarter in 2023. This growth was driven by a positive impact from acquisitions.
In addition to strong performance in other areas, Thomson Reuters Corporation (NYSE:TRI) also reported a solid cash position. The company’s operating cash flow came in at C$756 million, up 12% on a YoY basis. Its free cash for the quarter also grew to $591 million, from $529 million in the prior-year period. This strong cash position has enabled the company to grow its dividends for 31 years in a row, which places TRI on our list of the best dividend Canadian stocks. The stock’s dividend yield on January 10 came in at 1.39%.
According to Insider Monkey’s database of Q3 2024, 25 hedge funds held investments in Thomson Reuters Corporation (NYSE:TRI), up from 22 in the previous quarter. These stakes are worth $507.7 million in total.
4. Enbridge Inc. (NYSE:ENB)
Number of Hedge Fund Holders: 26
Enbridge Inc. (NYSE:ENB) ranks fourth on our list of the best dividend Canadian stocks for income investors. The Canadian multinational pipeline and energy company posted strong earnings in the third quarter of 2024. During the quarter, the company finalized the acquisition of three US natural gas utilities, a transaction initially announced in September 2023. These new assets complement Enbridge’s existing low-risk business model, delivering steady cash flow and opening doors to swift growth opportunities. The company reported a revenue of $10.66 billion, marking a substantial increase of over 48% compared to the same period the previous year and surpassing analysts’ expectations by $5.77 billion.
Enbridge Inc. (NYSE:ENB) has steadily expanded its energy infrastructure while increasing its emphasis on cleaner energy sources like natural gas and renewables. The growing industrial activity and rising electricity demand in the US and Canada are anticipated to boost natural gas consumption further. Data centers, in particular, are playing a key role in this increased electricity usage, driven by the expanding demand for AI applications. Many operators of these facilities are opting for cleaner energy solutions, such as renewables and natural gas, to power their operations. The stock is up by nearly 18% in the past 12 months.
Enbridge Inc. (NYSE:ENB) reported a solid cash position for the quarter, generating close to $3 billion in operating cash flow and $2.6 billion in distributable cash flow. On December 3, the company announced a 3% rise in its quarterly dividend, bringing it to C$0.9425 per share. This increase extended Enbridge’s impressive 30-year track record of dividend growth. The stock supports a dividend yield of 6.16%, as of January 10.
As of the close of Q3 2024, 26 hedge funds, down from 32 in the previous quarter, owned stakes in Enbridge Inc. (NYSE:ENB), as per Insider Monkey’s database. The total value of these stakes is $3.2 billion. With nearly 72 million shares, GQG Partners was the company’s largest stakeholder in Q3.
3. Canadian National Railway Company (NYSE:CNI)
Number of Hedge Fund Holders: 44
Canadian National Railway Company (NYSE:CNI) is a Canadian rail freight company that transports goods worth billions of dollars annually. In the past 12 months, the stock is down by nearly 20% as Canadian railways have encountered a tough year, grappling with labor disputes, strikes leading to port closures, and disruptions from adverse weather and wildfires. Despite these challenges, the company has benefited from long-term economic growth, serving as a vital part of the economy. Over the past two decades, Canadian National Railway (CNR) has seen its stock rise by over 605%, highlighting the company’s growth and operational efficiencies. This success has been bolstered by a consistent and increasing dividend.
Canadian National Railway Company (NYSE:CNI) reported strong earnings in the third quarter of 2024. The company’s scheduled operating plan showcased its resilience during the quarter, enabling swift adaptation to challenges from wildfires and extended labor disputes. Operations rebounded quickly, and the railroad is now performing efficiently. The company posted revenue of C$4.1 billion, showing a 3% growth from the same period last year.
Canadian National Railway Company (NYSE:CNI)’s cash position also remained stable, which is significant for income investors. The company’s operating cash flow was C$1.77 billion, up from C$1.5 billion in the same quarter last year. Its free cash flow also grew C$584 million, from C$581 million in the prior year period. Due to this cash generation, the company was able to grow its dividend payouts for 28 consecutive years. The company offers a quarterly dividend of C$0.845 per share and has a dividend yield of 2.39%, as of January 10.
Of the 900 hedge funds tracked by Insider Monkey at the end of Q3 2024, 44 funds held stakes in Canadian National Railway Company (NYSE:CNI), up from 42 in the preceding quarter. These stakes have a total value of more than $11.7 billion. Bill & Melinda Gates Foundation Trust owned the largest stake in the company, worth over $6.4 billion.
2. Canadian Natural Resources Limited (NYSE:CNQ)
Number of Hedge Fund Holders: 48
Canadian Natural Resources Limited (NYSE:CNQ) is an oil and natural gas company that specializes in related products and services. In the third quarter of 2024, the company reported $2.1 billion in revenue, with net earnings from operations reaching $2 billion. The company achieved a strong average production of around 1,363,000 BOE/d, consisting of 1,022,000 bbl/d of liquids and over 2.0 Bcf/d of natural gas.
Canadian Natural Resources Limited (NYSE:CNQ) distinguishes itself within the Canadian energy sector through its diverse production operations. Although it is best known for its oil sands production, the company also has assets in conventional heavy oil, light oil, offshore oil, natural gas, and natural gas liquids. With full ownership of most of these assets, the company’s management has the flexibility to reallocate capital across its portfolio swiftly, enabling it to seize the most attractive market opportunities. The stock has surged by over 9.4% in the past 12 months.
From a financial perspective, Canadian Natural Resources Limited (NYSE:CNQ) drew attention by generating over $3 billion in operating cash flow and $3.9 billion in adjusted funds flow during the quarter. It also returned $1.2 billion to shareholders through dividends. On October 7, the company announced a 7% increase in its quarterly dividend to C$0.5625 per share, marking its 26th consecutive year of dividend growth. With an attractive dividend yield of 4.76%, CNQ is one of the best dividend Canadian stocks on our list.
Insider Monkey’s database of Q3 2024 showed that 48 hedge funds held stakes in Canadian Natural Resources Limited (NYSE:CNQ), up from 46 in the previous quarter. The collective value of these stakes is more than $3.2 billion. With 43.5 million shares, Fisher Asset Management was the company’s leading stakeholder in Q3.
1. Agnico Eagle Mines Limited (NYSE:AEM)
Number of Hedge Fund Holders: 54
Agnico Eagle Mines Limited (NYSE:AEM) is a Toronto-based gold mining company that explores, develops, and produces precious metals. Gold is known for maintaining its value and is regarded as one of the most reliable investment assets worldwide. This stability is a key reason its demand and prices tend to rise during periods of market uncertainty, such as during wars or significant market downturns. The company gains considerable advantages from operating within this industry. AEM has surged significantly by nearly 62% in the past 12 months.
In the third quarter of 2024, Agnico Eagle Mines Limited (NYSE:AEM)’s operational efficiency, cost management, and disciplined capital use enabled it to capitalize on record gold prices for the benefit of its shareholders. During the quarter, the firm successfully repaid $375 million in debt, bolstered its cash reserves, and maintained strong shareholder returns. The quarter also saw robust gold production, with payable gold output reaching 863,445 ounces. Production costs per ounce stood at $908, total cash costs per ounce were $921, and the all-in-sustaining costs (AISC) per ounce amounted to $1,286.
Agnico Eagle Mines Limited (NYSE:AEM) also demonstrated a solid cash position, with an operating cash flow of over $1.08 billion and a free cash flow of $620 million. The company has remained committed to its shareholder obligation, paying regular dividends since 1983. It currently pays a quarterly dividend of $0.40 per share and has a dividend yield of 1.90%, as of January 10.
With a collective stake value of $973.4 million, 54 hedge funds held positions in Agnico Eagle Mines Limited (NYSE:AEM) in the third quarter of 2024, as per Insider Monkey’s database. In the previous quarter, 54 funds held stakes in the company.
Overall, Agnico Eagle Mines Limited (NYSE:AEM) ranks first on our list of the best dividend Canadian stocks for income investors. While we acknowledge the potential for AEM to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than AEM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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