25 Best Canadian Dividend Stocks 2022: Earn Passive Income

Looking for the best Canadian dividend stocks to buy and hold for your portfolio in 2022?

I’ve written over 1,000 articles about Canadian TSX stocks, many of which provide dividends to its investors.

Dividend stocks are some of the best investment options in Canada.

Below are my picks for the best Canadian dividend stocks for 2022 investors.

Dividend Investing In Canada

What should you look for in a dividend stock in Canada? The yield is the obvious answer, but there are other factors as well.

Also, you would most likely hold dividend stocks for longer terms compared to growth stocks, so make sure you give due consideration to the dividend stocks you are adding to your portfolio.

Adding all the best dividend stocks in Canada to your portfolio might seem like a good way to get the best of what dividend stocks (in general) have to offer, but it’s imperative that you understand your dividend goals before you start working on building your dividend portfolio.

And these goals go deeper than simply deciding whether you will be using your dividend stocks to generate a passive income, reinvest them to grow your stake, or use the cash they produce to expand your portfolio.

You should look for a broad array of metrics for the dividend stock you are thinking about buying, but they can all be boiled down to two things:

• Sustainability of the dividends
• Overall return potential of the stock

Best Canadian dividend stocks:

Here are my picks for the best dividend stocks in Canada:

1. BMO stock

• Ticker: TSX:BMO
• Dividend Yield: 3.07%
• Market Cap: $89 billion

With an outrageous dividend streak of over 190 years, BMO tops my list of most reliable Canadian dividend stock. It’s a household name, and there’s a BMO on every corner so most Canadians should be familiar with this company.

2. Royal Bank of Canada stock

Ticker: RY
Market Capitalization: $189 billion
Sector: Banking
Yield: 3.2%
Ten-Year CAGR: 16%

The Royal Bank of Canada reigned for many years as the “king” of the TSX, i.e., the largest security on the TSX, but its true stability comes from the Canadian banking sector. Thanks to the strict financial regulations, the Canadian banking sector is counted among one of the most stable banking sectors in the world.

• It offers a powerful combination of growth potential and yield, especially if you buy it during a bearish phase.
• The bank has adequate international exposure (and many foreign growth opportunities).
• It has grown its payouts for a decade and by 30% in the last five years.

3. Enbridge stock

Ticker: ENB
Market Capitalization: $102.6 billion
Sector: Energy
Yield: 6.5%
Ten-Year CAGR: 8.4%

Enbridge is the largest energy company in Canada. It’s primarily an energy “moving” company and is responsible for moving one-fourth of the crude produced in the entire North American region as well as one-fifth of the natural gas used in the US.

It also has a presence in the natural gas utility sphere (end-user distribution) and is diversifying into renewables.

• Enbridge has grown its payouts for 25 consecutive years, even though payout ratios are higher than 200%.
• It grew its payouts by 13.7% between 2017 and 2021.
• It’s incredibly stable, thanks to its position as a market leader and because, as a pipeline company, its income is not as vulnerable to crude prices as some other energy companies.

4. Fortis stock

Ticker: FTS
Market Capitalization: $26.3 billion
Sector: Utilities
Yield: 3.8%
Ten-Year CAGR: 9.2%

Fortis can easily be considered one of the most well-known dividend aristocrats in Canada. It has been growing its payouts for 47 consecutive years, making it the second oldest aristocrat in the country.

Fortis usually offers a decent mix of both capital growth potential and dividends, which makes it significantly more attractive than its counterpart Canadian Utilities.

• Fortis has a sustainable utility business with 3.4 million utility consumers (2.1 electrical and rest natural gas) in ten countries.
• Its stellar history, stable financials, and decent payout ratios make it one of the most secure dividend aristocrats on this list.

5. BNS stock

• Ticker: TSX:BNS
• Dividend Yield: 4.36%
• Market Cap: $100 billion

Scotiabank stock has been performing well. With its aggressive expansion into international markets, some investors were skeptical, but the strategy seems to have been paying off. It’s performed very well throughout several market crashes and is well-poised to capitalize on the next market bulls.

6. BCE stock

Ticker: BCE
Market Capitalization: $58.1 billion
Sector: Telecom
Yield: 5.4%
Ten-Year CAGR: 10.4%

BCE is part of the telecom oligopoly where three giants control about 80% of the market, and BCE is the largest of the three. BCE is also making great strides towards 5G, an avenue that is expected to help the company grow its revenue stream, making its payouts even more sustainable.

It has three major business segments: Wireline (broadband and voice), which still makes up about 50% of the revenue, wireless, and media.

• BCE has a strong presence, reasonable penetration, and decent scope to grow its wireless business segment via 5G.
• It’s a financially resilient company, and the dividends don’t fluctuate much, even during harsh market conditions.
• It has grown its dividends for 12 consecutive years, even through years, with payout ratios higher than 100%.

7. Telus stock

Ticker: T
Market Capitalization: $39.2 billion
Sector: Telecom
Yield: 4.5%
Ten-Year CAGR: 12.6%

Telus is another telecom giant benefitting from the Oligopoly in the sector. It boasts 16 million subscriber connections across multiple dimensions, though most (about 10.7 million) are wireless subscribers.

The company has room to grow in the 5G front as well as grow its internet subscribers because the TV and residential voice (wired) business segments are slowly going under.

• Telus offers slightly stronger (and more consistent) capital growth potential but with a lower yield.
• The company shows amazing financial resilience during tough markets, and the payout ratio rarely enters the danger zone.
• It has grown its payouts by about 36% since 2017 and has been growing its payouts for 17 consecutive years.

8. Transcontinental stock

• Ticker: TSX:TCL
• Dividend Yield: 4.76%
• Market Cap: $1.62 billion

After a large acquisition that shows that Transcontinental wants to become a top player in the packaging business and with a very healthy dividend yield, Transcontinental stock is one of my best Canadian dividend stock picks.

9. The North West Company stock

• Ticker: TSX:NWC
• Dividend Yield: 4.75%
• Dividend Payout Ratio: 68.06%
• Market Cap: $1.35 billion

With an attractive dividend yield, this discount store operator can provide income while allowing room for stock appreciation as price margins are expected to increase.

10. Suncor stock

• Ticker: TSX:SU
• Dividend Yield: 5.44%
• Market Cap: $36.46 billion

There’s a reason why 10.5 million shares of Suncor stock has been purchased by Warren Buffett earlier this year. He’s bullish on energy, and Suncor is definitely the company you want to bet on if you feel energy will climb.

11. Pembina stock

Ticker: PPL
Market Capitalization: $22.9 billion
Sector: Energy 
Yield: 6%
Ten-Year CAGR: 9.5%

Pembina pipeline is coveted for both its dividends and its growth potential. Its growth, even when slow, tends to be quite consistent. As a pipeline company, its revenues depend upon long-term contracts with other energy companies, allowing it to survive energy sector fluctuations a bit better.

• It has grown its payouts for nine consecutive years, though the growth is not quite substantial.
• Pembina pays monthly dividends and has sustained and grown its dividends despite the payout ratios being through the roof.
• The bulk of its income comes from its pipeline business. Asset-wise, it makes about two-thirds of its money from natural gas and NGL.

12. Granite REIT stock

Ticker: GRT.UN
Market Capitalization: $6.5 billion
Sector: Real Estate
Yield: 3%
Ten-Year CAGR: 17.8%

Granite REIT has a well-diversified commercial portfolio, a decent bit of which is overseas, and a lot of it is in the US.

It focuses on industrial properties, especially e-commerce related logistics and warehouse properties which have been the primary driver of the company’s growth. Its financials have kept pace with the stock’s growth.

• The payout ratio is quite low for a REIT, making its payouts much more sustainable and secure compared to the broader sector.
• The 3% yield is decent, but the capital growth potential is a more compelling reason for investing in this stock.
• It’s the oldest aristocrat in the real estate sector that has grown its payouts for ten consecutive years.

13. Toronto Dominion Bank Stock

Ticker: TD
Market Capitalization: $169.6 billion
Sector: Banking
Yield: 3.3%
Ten-Year CAGR: 14.4%

Toronto Dominion is the second largest bank in Canada and more US-facing than the Royal Bank. It’s also considered the best digital bank in Canada, which is technically the future of banking. And if it keeps growing its digital front just as aggressively, it might be in a position to beat the Royal Bank for the top spot.

• It’s financially stable and offers a decent bit of capital growth on top of an already attractive yield.
• The payout ratio has only crossed the 50% threshold once in the last decade.
• The bank has grown its payouts for ten consecutive years and grew its dividends by 43.6% in the last five years.

14. TC Energy Stock

Ticker: TRP
Market Capitalization: $60 billion
Sector: Energy
Yield: 5.6%
Ten-Year CAGR: 8.9%

TC Energy is another pipeline company with more of a focus on natural gas than crude oil, making it more environmentally friendly. It operates over 93,000 km of natural gas pipelines in North America and 4,900 km of oil pipelines.

It also has seven power generation facilities to its name (in four countries), with enough capacity to supply four million homes.

• TC Energy has grown its payouts for two consecutive decades.
• It’s a powerful energy player, with the safe pipeline business and additional safety of natural gas, which has a better place in a sustainable future compared to crude oil.
• It has grown its dividends quite generously: 39% in the last five years.

15. Manulife Stock

Ticker: MFC
Market Capitalization: $50.1 billion
Sector: Insurance
Yield: 4.3%
Ten-Year CAGR: 12.5%

While not the giant, Manulife is a giant in the Canadian insurance industry. The company has been around for about 130 years and has expanded its business reach not just to the US but overseas as well, and has an extensive network in Asia.

Its products differ from country to country and cater to both individuals and businesses, making the insurance business quite comprehensive.

• Manulife’s capital appreciation potential is minimal so try to buy it for maximum yield (when the stock is dipping).
• Its payout ratios have been unnaturally stable and haven’t even crossed 71% in the last ten years.

16. Great-West Lifeco Stock

Ticker: GWO
Market Capitalization: $35.6 billion
Sector: Insurance
Yield: 4.5%
Ten-Year CAGR: 11.5%

Great-West Lifeco is a holding company with two major business groups: Canadian life assurance company (with six subsidiaries) and Great-West US, with several subsidiaries. The company has over two trillion worth of assets under management and has initiated over 205 thousand client-adviser relationships.

• Great-West Lifeco offers a generous yield with brutally stable payout ratios.
• It has a stellar dividend history (six consecutive years of growth), and its dividend growth is modest (19% since 2017).
• The business is diversified geographically and in terms of service offerings.

17. Power Corporation Of Canada Stock

Ticker: POW
Market Capitalization: $28.7 billion
Sector: Insurance 
Yield: 4.2%
Ten-Year CAGR: 11.8%

The Power Corporation Of Canada owns about two-thirds of Great-West Lifeco, about 61% of IGM financials, and has a stake in three other major businesses, one from China.

Its primary focus is on financial service and wealth management businesses (including insurance) and can be considered a stable company with stakes and interests in a few other stable companies.

• The combination yield and growth potential, especially if you consider the stable trajectory of its growth, is quite solid.
• The payout ratios haven’t grown over 84% in the last five years.
• It grew its payouts by 33% in the last five years, far outpacing inflation.

18. Emera Stock

Ticker: EMA
Market Capitalization: $15.2 billion
Sector: Utilities
Yield: 4.5%
Ten-Year CAGR: 11.1%

As a utility business, Emera offers stability similar to Fortis and Canadian utilities. The revenue stream of the company is tied to its 2.5 million utility customers in six countries, making the business reasonably diversified.

Emera also has $31 billion in assets, making it a sizeable player in the utility industry. It offers both electricity and natural gas to its consumers and has seven regulated companies and two unregulated investments under its banner.

• It’s an old aristocrat with 14 years of consecutive dividend increases and stable payouts.
• Both its dividend growth and capital growth potentials are modest.

19. Algonquin Power And Utilities Stock

Ticker: AQN
Market Capitalization: $11.94 billion
Sector: Utilities
Yield: 3.84
Ten-Year CAGR: 17.1%

Algonquin is a utility company with a lot of exposure to renewables and a decent international presence. It caters to over a million utility customers in the US and Canada. It doesn’t just deliver utilities.

The renewable energy group already has an installed capacity of 2 GWs, and 2GW more is expected to come online in the future. The collective assets (power generation and distribution) are worth about $10.6 billion.

• Thanks to the nature of its business, its income is quite stable, and payouts are highly sustainable.
• The demand for Algonquin’s clean power is expected to grow in the future.
• It’s a strong and generous dividend grower and grew its payouts by 46% in the last five years.

20. Canadian Utilities Stock

Ticker: CU
Market Capitalization: $9.49 billion
Sector: Utilities
Yield: 4.9%
Ten-Year CAGR: 5.3%

Canadian Utilities is the oldest dividend aristocrat on this list after growing its payouts for 49 consecutive years (one year away from becoming a dividend king). It comes under the umbrella of ATCO Group.

It caters to both electric and natural gas consumers, primarily in Alberta. It has about 1.1 million natural gas consumers and over a quarter of a million electricity consumers in Alberta (domestic). 

• It offers a lot of stability as a utility business with strong domestic roots.
• The company is also expanding its hydrogen business, and it may emerge as a strong hydrogen stock in the coming years.
• Financially stable company that had sustained its dividends through years when the payout ratio was above 100%.
• It grew its payouts by 23% in the last five years.

21. SmartCentres REIT Stock

Ticker: SRU.UN
Market Capitalization: $5.54 billion
Sector: Real Estate
Yield: 5.7%
Ten-Year CAGR: 8.1%

Despite being some of the most generous dividend stocks, REITs are underrepresented in the aristocratic dividends category. But among the few there are, SmartCentres stand out for a few reasons.

It has an impressive portfolio, most of which is anchored by Walmart and the remaining tenant base is just as impressive. The REIT is also expanding into the smart living business.

• A generous yield with decent history, though its dividend growth is mostly symbolic (8.8% in the last five years).
• It has sustained its payouts through some very tough periods.
• The payout ratio is usually quite stable for a REIT.

22. NorthWest Healthcare Properties REIT Stock (Not An Aristocrat)

Ticker: NWH.UN
Market Capitalization: $2.96 billion
Sector: Real Estate
Yield: 5.9%
Ten-Year CAGR: N/A (Five-Year CAGR: 14%)

Another non-aristocrat on this list is here because of the unique asset class (within the real estate) that it represents: Healthcare properties. These are usually stable properties (from a rental perspective) and have long-term leases.

• The REIT has a healthy, geographically diversified portfolio spread out over five countries.
• It offers a powerful combination of high-yield and stable/consistent growth.
• The payout ratios and financials are stable, endorsing the sustainability of the dividends.

23. First National Financial Stock

Ticker: FN
Market Capitalization: $2.6 billion
Sector: Financials (Mortgage Lending)
Yield: 6.3%
Ten-Year CAGR: 20.2%

First National Financial is one of the largest non-bank mortgage lenders, a position that comes with certain risks and rewards.

The residential real estate market has been abnormally hot for a few years now, and if people start defaulting on their residential loans, First National might find it difficult to survive since it doesn’t have the financial weight and assets of a large bank.

But since it also makes commercial loans (which spreads out the risk) and can cater to a market beyond what banks have captured, it can create a more sizeable revenue stream from essentially the same mortgages that banks give.

• It has been generously growing its payouts for ten consecutive years, 38% in the last five years.
• The payout ratios have been relatively safe in the last ten years.

24. Exchange Income Fund Stock

Ticker: EIF
Market Capitalization: $1.76 billion
Sector: Industrials
Yield: 4.95
Ten-Year CAGR: 15.7%

Exchange Income Fund is a small-cap acquisition company with several organizations related to the airline/aviation business in its portfolio from all across the world.

This diversification contributed to the company’s resilience during the 2020 pandemic when despite a massive 63% fall, the company didn’t just recover before the broader airline sector but also sustained its payouts.

• EIF has grown its payouts for ten consecutive years and offers a powerful combination of dividends and growth.
• It’s a financially stable and resilient business.
• It pays monthly dividends, has a better frequency for passive income, and is relatively unique outside the real estate sector.

25. Slate Grocery REIT Stock (Not An Aristocrat)

Ticker: SGR.UN
Market Capitalization: $802 million
Sector: Real Estate 
Yield: 6.4%
Ten-Year CAGR: N/A (Five-year CAGR: 8.6%)

Slate Grocery, while listed in Canada and part of Toronto-based Slate Asset Management, is purely a US-based REIT. It has a portfolio of 107 properties in 23 US states, though with a much higher concentration in the east coast states.

Almost all of its properties are grocery-anchored (96%), which is a timeless and almost recession-proof business.

• It offers sustainability and safety of dividends through its asset class as well as its payout ratios.
• It’s a decent combination of capital appreciation potential and dividend-based returns.

26. Rogers Sugar Stock (Not An Aristocrat)

Ticker: RSI
Market Capitalization: $593 million
Sector: Consumer staples
Yield: 6.2%
Ten-Year CAGR: 8.7%

Rogers doesn’t have the credibility of an aristocrat, but the company has been a stable dividend payer for a very long time. It’s also a leader in its industry both nationally (processed sugars) and globally (maple syrup).

This dominance in a relative niche market segment makes Rogers Sugars a relatively stable company.

• It usually offers a high enough yield, and the payout ratios are often stable.
• Despite its small market cap, it’s a giant in its industry.
• The capital appreciation potential of the company is not just meager but also unreliable.

Dividend Sustainability

You want your dividend stocks to maintain (ideally grow) their payouts. That’s one of the reasons why dividend aristocrats are so popular. In Canada, dividend aristocrats are companies that have grown their dividends for five or more consecutive years.

This is a much “lenient” criteria compared to the US where a company has to grow its dividends for 25 consecutive years to claim the title of dividends, but even with the less restrictive criteria in place, dividend aristocrats offer more confidence to investors when it comes to dividend sustainability because:

• Aristocrats are more invested in maintaining and growing their dividends (compared to other companies) because oftentimes (not always), these dividends are the primary investor motivation.” If they slash their dividends, investors are highly likely to jump ship. It’s a risk that dividend-paying companies, especially aristocrats, rarely take, and they try to remediate the situation as soon as possible. An example is Suncor. The beloved aristocrat slashed its dividends in 2020, but since the last quarter of 2021, the company has doubled its dividends ($0.42 per share), bringing them quite close to the former level ($0.465 per share).
• Dividend growth, even if it’s relatively mild (in single digits each year), helps your dividend income stay ahead of inflation.

 But even if you are choosing from the select pool of dividend aristocrats, it’s a good idea to look into other sustainability indicators.

Financials: That’s the first thing you have to look into if you want to gauge whether a company will be able to sustain its dividends.

A dividend-paying company must have enough funds each quarter or month to pay dividends to its shareholders while maintaining operations expenses, which come before dividends.

If a company cannot maintain its operations from its income, it might slash or suspend its dividends in order to keep the lights on. There are many financial metrics/ratios that you can look into, but for dividend sustainability, a few are:

1. Payout Ratio: It tells you what part of the income the company is paying in the form of dividends. Payout ratios differ from industry to industry. Banks usually stay below 50%, while it’s not uncommon to see REITs with payouts ratio near (or above) 100%. For REITs, another important metric to consider is FFO. Generally, payout ratios between 30% and 60% are considered healthy, but they should never be taken as a stand-alone metric.
2. Dividend Coverage Ratio: This ratio divides a company’s after-tax profits by the amount of money it has to pay out in dividends to determine how many times a company can pay dividends to its investors in a fiscal period (usually a quarter). The higher the ratio, the better.
3. Free Cash Flow To Equity: Free cash flow tells you how much cash is available for all individuals and parties that have a stake in the business. That includes shareholders and debtholders. Free Cash Flow to Equity Ratio (FCFE) tells you how much cash is left for equity holders and is a good measure to determine whether there is enough cash to pay off dividends.

Apart from these financial ratios, debt is an important financial aspect to consider. High and steadily increasing net debt can be troubling.

History: The future performance of a stock, including its ability to sustain its dividends, can be reasonably gauged by its past. That doesn’t mean that if a company hasn’t slashed its dividends in the past, it will never do so in the future.

A company’s Past performance isn’t a guarantee of similar future performance, but it’s the best data set we have to predict and plan for future performance. For dividend stock, one important thing you should look for is how harsh the payout ratios the company has sustained its dividends through. 

Competitive Advantage: The competitive advantage is an intangible quality, but it can help you predict a business’ income (consequently dividend) sustainability as well as the chances of its growth.

Businesses that are obvious leaders in their respective industries are good picks, and smaller players in niche markets might also offer stability.

Monopolies and oligopolies (Big six Canadian banks, three telecom giants, two railway giants) ensure dividend sustainability as well.

Make sure to be on the lookout for disruptive trends and technologies that can disrupt even the giants from their positions, like what green power is doing to certain energy players. However, that’s something that will play out in decades, not years.

Dividend Stocks: Overall Return Potential

When it comes to the return potential of a dividend stock, yield is the first thing that investors do and should look into.

Yield: When it comes to yield, the formula is simple: The bigger, the better. But only if “bigger” doesn’t start impacting sustainability.

Often high-yield stocks are high-yield because the company’s financials and valuation are in a slump, and if the slump continues for long enough, the company may slash or suspend its dividends.

So make sure the high yield is also sustainable. You can lock in a high yield during market crashes and corrections, which would also be a good buy from a valuation perspective.

When it comes to choosing between yield and dividend growth perspectives, time is an important variable to consider.

Even if a stock is paying a lower yield, if it’s growing its payouts every year, the dividend income you get from it would eventually match (given enough years and the difference between the two yields) what you would get from a higher-yielding stock.

For stocks with just a 1% or lower difference between yields, it might happen within a decade.

Capital Appreciation: Capital appreciation shouldn’t just be considered an added bonus when investing in dividend stocks; it’s part of the equation and the decision-making process, especially from a value-investing perspective.

A 3% yield might look significantly more attractive compared to a 5% yield if the former comes with a reliable 10% capital growth each year. But the conundrum is that few growth stocks have high enough yields to be considered for their dividends.

And generous dividend stocks with high yields often offer minimal to no capital appreciation potential. For such stocks, make sure they can at least be relied upon for capital preservation. Fluctuations might be fine, but a gradual but consistent decline can spell trouble.

How to buy Canadian dividend stocks

You can purchase stocks in Canada through most Canadian brokerage platforms that offer stock and ETF trading. My top choices are Wealthsimple Trade and Questrade.

Image	Product Title	Features	Price
Editor's Choice	Wealthsimple Trade	Stock buys and sells have $0 trading fees Desktop and mobile trading Highly rated	$50 Signup Bonus
Reliable Pick	Questrade	Solid research tools Desktop and mobile trading Most types of accounts available	$50 Free Stock Trades

To learn more, check out my full breakdown of the best trading platforms in Canada here.

Conclusion

I chose these stocks because they span multiple industries in Canada, and are known for their track record and reliability.

I hope this list of the best dividend stocks in Canada will help you identify new prospects and develop a more wholesome, well-diversified, and stable dividend portfolio.

And the capital appreciation they offer besides their dividend prowess can make them powerful contributors to the growth of your nest egg if you hold onto them for long enough.

If you want to learn more about dividends in Canada, check out my picks for the best dividend aristocrats in Canada, and the best monthly dividend stocks as well.