High rates of interest punish dividend payers in two ways, the speculation goes. They lure capital into safer interest-bearing assets like bonds and guaranteed investment certificates (GICs), which now offer competitive yields. And they raise the fee of financing for high-dividend sectors that borrow heavily, like utilities, pipelines and real estate.
However, once rates of interest begin to fall, dividend stocks are inclined to outperform other securities. Their high yields again look more attractive in comparison with deposits and glued income securities – raising the prospect of upper earnings multiples combined with high returns as investors return to the sector.
Consider our list of the 100 best Canadian dividend stocks for 2024 below as a start line to your seek for investment opportunities, not an end goal. You could also be looking long and hard for what investors typically consider Dividend Aristocrats: banks, telecoms, utilities, pipelines and real estate investment trusts (REITs). (They’re there. It’s just not as obvious.) Understand that this exercise is designed to discover candidates based on quantitative aspects that include not only dividend yield and sustainability, but in addition metrics of profitability, financial strength and value. (Learn more about our methodology for the most effective dividend stocks.)
Canada’s best dividend stocks
- The yield value (40% weighting) looks at the present dividend yield and dividend growth during the last five years.
- The stability rating (weighting 40%) shows the debt-to-equity ratio, return on equity, earnings growth during the last five years and the ratio of earnings per share to dividends.
- The rating rating (20% weighting) reflects the stock’s earnings yield (the inverse of the price-to-earnings ratio) and the price-to-book ratio.
Rating the 100 highest dividend stocks in Canada
Many dividend-focused investors gravitate toward bank stocks – but they’ve taken a back seat on this 12 months’s top 100. While bank stocks performed quite well on dividends and valuation, they suffered from below-average stability rankings in comparison with most Toronto Stock Exchange-listed dividend payers in 2023, notes Aman Raina, investment coach and founding father of Sage Investors, who analyzed the information. “Insurance companies, on the other hand, have a more balanced valuation, so if you’re looking for financial exposure, this subsector seems to have some decent upside.”
Another surprise on this 12 months’s list of the most effective dividend stocks was how well commodity producing firms performed on all three criteria. “Given the potential for inflation and falling rates of interest, which may lead to potentially lower real rates of interest, this might [materials and energy] “We still need to free up some legs for a run in 2024,” says Raina.
Depending on your individual investment process, consider the next list as a source of ideas which you can complement with more thorough due diligence, especially in 2024. Our screening doesn’t keep in mind qualitative aspects reminiscent of the expertise of company management, consumer and/or technology trends, or risks related to the countries by which the businesses operate.
To see all the information within the table, move the columns right or left together with your fingers or mouse. You can filter or reorder the rankings by utilizing the search tool or by clicking on column headers. You also can download the information to your device in Excel, CSV and PDF formats.
