The best dividend stocks in Canada 2024 - MoneySense (2024)

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It has been a lousy couple of years for dividend investors in Canada. First, the stock market meltdown of 2022 destroyed capital for most stock investors, then rising bond yields in 2023 served to lure investors’ money out of dividend stocks. If you had a selection of Canadian dividend payers at the start of 2022, it’s quite possible they’ve experienced a capital loss. The Dow Jones Canada Select Dividend Index had an annualized rate of return of -0.11% for the two-year period ending Dec. 31, 2023.

The good news, though, is that the field of dividend stocks today is looking lean and fit in terms of both yield and valuation, which could position Canadian dividend investors to reap gains in 2024.

Dividend stock performance in Canada

A few years ago, you could count on your hands the number of Canadian large caps paying a 5% dividend. Today, that rate looks almost ordinary. The forward yield on the S&P/TSX Composite Index is 3.3%. That’s taking in some 240 stocks, some of which pay no dividends at all. Just think of the payouts if you decided to be more discerning. With elevated bond yields nipping at their heels, the 176 dividend payers in the S&P/TSX Composite Index average a 3.82% yield. The MoneySense Top 100 dividend stocks in Canada best dividend stocks come out at 3.16% on an equal-weight basis.

That means a couple of things.

First, it would take another year of 3%-plus capital losses for dividend investors to post negative total returns this year.

Second, if—as the market consensus seems to think—interest rates have now topped out and central banks start cutting rates within the next 12 months, bond yields should decline and stocks’ risk premium will look more and more attractive. This would be a signal for conservative investors to shift some money back into dividend stocks, ultimately supporting their prices.

Using the best dividend stocks methodology of taking not just their yield but also stability and valuation into account, we once again identified Canada’s 100 best dividend stocks. We then narrowed down that list to create an A-Team and a B-Team, each containing 10 dividend all-stars. This year’s A-Team skews heavily to the materials and energy sectors. It includes just two non-resource outliers: insurer and asset manager iA Financial Corp. and technology stock Enghouse Systems.

How Canadian dividend stocks performed

What pops out at first glance of the top ranks is the absence of what usually comes to mind for dividend stocks: banks, utilities, telecoms, pipelines, and real estate investment trusts (REITs).

“The financials have been really out of favour,” says Aman Raina, an investment coach and founder of Sage Investors, who compiled the 2024 list of top dividend stocks. Where they fell short in the calculations was mostly on measures of profitability.

However, he thinks Canadian investors have to expect some turnover, given the reversal in macroeconomic conditions that we’ve seen over the past two years. “We were living in a world with practically zero interest rates,” Raina says. Canadian investors had to take on more risk to get decent yields from their investments.

Today, investors can find virtually risk-free investments with a 5% yield. That’s going to reshuffle the deck somewhat.

“The commodity-type companies are showing up [with better scores] on a valuation perspective,” Raina says. “It could set them up nicely for [investment gains] this year because if rates go down and, more specifically, if the U.S. dollar goes down, that could provide a tailwind for some of these commodity stocks.”

Those seeking more sectoral diversification will want to check out our B-Team. These stocks are almost as promising, by our criteria, and with their greater industrial diversity, they can help fill any gaps in your portfolio. (As our past dividend performance summary shows, last year’s B list actually far outperformed the A list.)

What the numbers appear to be saying is that 2024 might be a year to lean into natural resources. “Going into this [process], I’m not trying to skew it to get a certain outcome. We’re just running the factors, and whatever comes out, comes out,” Raina says. “The theme is, right now, commodity stocks might be undervalued and provide an opportunity.”

The MoneySense A-Team and B-Team dividend stocks for 2024

To view all the data in the table, slide the columns right or left using your fingers or mouse. You can filter or rearrange the rankings by using the search tool or clicking on column headings. You can also download the data to your device in Excel, CSV and PDF formats.

Top dividends A-team

Top dividends B-team

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