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Looking for Dividend Stocks in Canada? Check Out These Top Picks

Adam Othman
·3 min read
grow money, wealth build
Image source: Getty Images

Written by Adam Othman at The Motley Fool Canada

There are several possible approaches to stock market investing in Canada to grow your wealth. By creating a well-balanced self-directed portfolio, you can realize wealth growth through capital gains and dividend income.

Investing in dividend stocks can help you get returns on your investment through distributions by the underlying companies. Dividend-paying companies pay investors a share of the profits through quarterly or monthly distributions. By identifying and investing in the right dividend stocks, you can set yourself up for substantial long-term wealth growth.

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Today, I will discuss two of my top picks for Canadian investors seeking dividend stocks for their self-directed portfolios.

Toronto-Dominion Bank

Toronto-Dominion Bank (TSX:TD) is a $142.6 billion market capitalization multinational banking and financial services corporation. Headquartered in Toronto, TD Bank is the second-largest Canadian bank by market cap. Operating in the domestic market and US, TD Bank is also a reliable dividend-paying stock, having paid dividends for well over a century without fail.

Pandemic-induced restrictions forced TD Bank stock and its peers to pause dividend hikes. However, TD Bank picked things up right where it left them as soon as the government eased the restriction in late 2021. It has increased its payouts by an over 10% compound annual rate in the last 25 years.

Amid macroeconomic issues, TD Bank cancelled its acquisition of First Horizon in the US. By keeping the US$13.4 billion it would have otherwise invested, it sits on a mountain of cash that can help TD Bank ride out any recession. As of this writing, TD Bank stock trades for $78.26 per share and boasts a juicy 4.91% dividend yield.

SmartCentres REIT

Investing in SmartCentres REIT (TSX:SRU.UN) can be an excellent way to gain exposure to the Canadian real estate market without the cash outlay required to purchase a property.

As one of the biggest Real Estate Investment Trusts (REITs) in the country, SmartCentres REIT can be a great investment to become a lazy landlord. The $3.7 billion market capitalization REIT boasts a portfolio of over 185 assets worth over US$11 billion.

Its extensive network of income-producing and value-oriented retail and first-class office space properties generates substantial revenue for the REIT. In turn, SmartCentres REIT is able to pay reliable and growing shareholder dividends to its investors. Boasting tenants like Walmart and Metro under its belt, most of its rent collection is from essential and creditworthy service providers.

As of this writing, SmartCentres REIT trades for $25.55 per share and boasts a juicy 7.26% dividend yield. Paying on a monthly schedule, SmartCentres REIT can be an excellent asset to own to generate a monthly passive income.

Foolish takeaway

The right dividend stocks can serve as a stable income stream. Even when share prices are falling, reliable dividend stocks can help you offset losses through regular distributions. Between dividend income and long-term capital gains, TD Bank stock and SmartCentres REIT can be excellent additions to your self-directed portfolio.

The post Looking for Dividend Stocks in Canada? Check Out These Top Picks appeared first on The Motley Fool Canada.

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Our market-beating analyst team just revealed what they believe are the 5 best stocks for investors to buy in May 2023... and SmartCentres REIT wasn't on the list.

The online investing service they've run for nearly a decade, Motley Fool Stock Advisor Canada, is beating the TSX by 23 percentage points. And right now, they think there are 5 stocks that are better buys.

See the 5 Stocks * Returns as of 5/24/23

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Fool contributor Adam Othman has no position in any of the stocks mentioned. The Motley Fool recommends SmartCentres Real Estate Investment Trust. The Motley Fool has a disclosure policy.

2023