10 Best Canadian Dividend Aristocrat Stocks (2022): Earn Passive Income

Looking for an easy way to earn passive income that could grow over time? You may want to start investing in Canadian dividend aristocrats.

If you’re just saving your TFSA money in a low-interest savings account, it will be tough to build a significant nest egg. 

In this low-interest environment, interest and bonds barely help you stay ahead of inflation. Still, among those who are investing, 62% of Canadians have just cash in their TFSAs. 

Stocks, especially dependable and trustworthy stocks like dividend aristocrats, can be great investments. 

This is why I’ve created this piece to help you identify some of the best Canadian dividend aristocrat stocks.

What is a Dividend Aristocrat?

Dividends are one of the ways that companies reward their investor. The company pays a part of its profits to its investors (based on how much equity, or how many shares of the company they have). Not all companies pay dividends, and not all dividend-paying companies are the same. 

Among dividend payers, there are commoners, and there are aristocrats. And even if we divest with this “royal” analogy, dividend aristocrats are a definite step up from ordinary dividend stocks, for one simple reason: They increase their dividends every year. This is actually how a dividend stock gets crowned with the title of an aristocrat in the first place.

In Canada, a company that’s listed on TSX and a member of S&P Canada BMI will be considered a dividend aristocrat if it:

  • Increases its dividend payout for five consecutive years. 
  • Have a market capitalization of $300 million or more.

The requirements are much less stringent here than they are in the US. There, a company must raise its dividends for 25 consecutive years to be considered a dividend aristocrat. 

Dividend Aristocrat Characteristics

There are a few other characteristics that are associated with dividend aristocrat stocks that you should know about. Dividend aristocrats are usually large-cap, well-established, blue-chip companies that are relatively safer compared to other stocks. The important word here is “relatively” because no stock is infallible or immune to market dynamics. 

They can and do slash their dividends if they aren’t making enough money. Unlike other dividend stocks, dividend aristocrats rely upon the reputation of their dividends, and just slashing their dividends once can get them kicked off the aristocrat ranks. 

Also, dividend aristocrats aren’t always very high-yielding stocks. And an abnormally high-yield (especially at the cost of an unsustainable payout ratio) is usually a red flag.

But the yield does go up if the stock dips or crashes (temporarily), and it’s usually a good time to buy a dividend aristocrat, but only if its chances of recovery are high.

Lastly, some people think that dividend aristocrats offer just that, dividends. But the fact is that many dividend aristocrats are also good growth stocks that offer ample capital growth opportunity, though the tradeoff is usually a low dividend yield.

The bottom line, the yield isn’t the only thing you should look into when you are considering a dividend aristocrat. Capital growth prospects, payout ratio, dividend growth rate, and even payout frequency (if you are investing to start a dividend income) are important factors to consider.

10 Of The Best Canadian Dividend Aristocrat Stocks

Best Canadian Dividend Aristocrat Stocks Infographics

Several factors contribute to the relative strength of a company’s dividends. But many of those factors are time dependant and vary based on how the stock is performing. So we have arranged ten of the best Canadian dividend aristocrat stocks there are based on their seniority. 

(All the numbers/figures below are from September 2020)

1. Fortis Stock

Fortis Stock logo

Ticker: FTS
Dividend Yield: 3.53%
Dividend Payout Ratio: 76.81%
Market Cap: $27.42 billion

Fortis is arguably the most revered dividend aristocrat currently trading on TSX. It has been increasing its dividend payouts for 46 consecutive years, making it the second-oldest aristocrat in Canada (after Canadian Utilities). Fortis is a smart buy, and not just because of its stellar dividend history; it’s a utility stock with a significant presence in Canada, the US, and the Caribbean. It serves over 2.2 million electric and 1.1 million gas utility customers. 

This offers cash flow and revenue stability to the company because even in economic depressions, people prioritize paying their utilities. 99% of the company’s $56 billion worth of assets are regulated. Fortis has an enviable balance sheet. And the company is also focusing on clean energy and renewable energy sources, which means it’s well-poised for the future. 

Fortis offers a good dividend yield and a decent dividend growth rate. Between 2016 and 2020, the Compound Annual Growth Rate (CAGR) of its dividends was 4.78%. But Fortis also offers capital growth. In the last decade (2010 – 2020), the company grew by almost 9.6% every year (growth rate adjusted for dividends). This might not be comparable to powerful growth stocks (which are relatively riskier), but it’s very generous for a stable dividend aristocrat. 

In my opinion, Fortis gets the top spot for more than just its dividend growth history.

2. Metro Stock

metro Stock logo

Ticker: MRU
Dividend Yield: 1.48%
Dividend Payout Ratio: 21.77%
Market Cap: $15.24 billion

Metro is another “old one” on this list. With 25 years of consecutive dividend increases under its belt, the company can pass for an aristocrat across the border as well. It might seem like a step down from Fortis, especially when you look at the dividend yield, but what it lacks in the size of its payouts, it more than makes up for in two areas: Dividend growth and capital growth. In the last five years, the company grew its dividends by almost 9.4% each year. 

Metro’s capital growth history is even more powerful. Its CAGR for the decade between 2010 and 2020 was 17%. This is powerful enough to double your capital in less than five years. If you are preparing a dividend-based investment portfolio, you might want to think twice before discarding Metro for its paltry yield. It can add a lot of activity to your investment portfolio. Investors with dividend-based portfolios also need to sell stocks sometimes (when dividends are not enough to cover expenses). Growth-oriented aristocrats like Metro can be powerful allies in such situations.  

The company is not safe in the same way that Fortis is, but it has its own strength. It deals in two things that are prioritized even more than utilities: Food and health. The supermarket chain has over 950 food stores under different banners, and over 650 drug stores. This enormous footprint and its business model make it an ideal long-term investment.

3. Enbridge Stock

Enbridge Stock

Ticker: ENB
Dividend Yield: 7.06%
Dividend Payout Ratio: 116.73%
Market Cap: $97.41 billion

It would also be disrespectful to create a dividend aristocrat list without Enbridge. It’s one of the largest energy companies in Canada and a leader in its sector. The company is responsible for moving one-quarter of the oil produced in North America through its extensive pipeline network. It also transports one-fifth of the natural gas used in the US. It’s also focusing on renewable and has stakes in 21 wind farms, with a combined capacity of 3.9 GW, and exploring other options.

The company has always been generous with its dividends and hasn’t slashed them despite economic hardships. It sustained its juicy yield and generous payouts even through the 2008 recession, during the oil price plunge between 2014 and 2016. Even in the 2020 market crash, when dried up, oil demand pushed the prices into negative territory for the first time. Even when the payout ratio grew dangerously high, the company’s commitment to sustain its dividends makes it worthy of this list. Not to mention its very generous yield, which can be game-changing in any dividend-based portfolio. 

Thanks to a wealth of assets, the company has a solid balance sheet. It’s well-positioned in the North American energy sector. But it doesn’t offer a lot of capital growth potential.

4. Canadian National Railway Stock

Canadian National Railway Stock

Ticker: CNR
Dividend Yield: 1.57%
Dividend Payout Ratio: 36.50%
Market Cap: $116.33 billion

Canadian National Railway is a North American transportation behemoth that owns and operates a 20,000-mile network in Canada and Mid-America. The bulk of its revenue is generated by its logistics operation. CNR’s railroads connect three coasts (the Atlantic, the Pacific, and the Gulf of Mexico), which puts it in an ideal place from a logistic and heavy cargo transportation perspective.

The company has a rich and eventful history of stitching different parts of the country together. Such companies manage to garner a lot of positive investor sentiment since they are part of the country’s history. But CNR seems like a solid investment from a pure numbers perspective as well. Its assets are almost 1.7 times more than its liabilities, making it a trustworthy, asset-backed company. Another benefit that it enjoys is a state of very little competition.

As a dividend stock, it mimics the pattern of Metro: The yield is not very mouthwatering, but its capital growth is. In the last decade, it almost grew 17% every year (based on its 10-year CAGR). It also grew its dividends by about 9% a year between 2016 and 2020. It’s usually a bit overpriced, so a good time to buy it would be during a market crash or a recession when the stock is a bit more fairly valued. 

5. Telus Stock

Telus Stock

Ticker: T
Dividend Yield: 4.44%
Dividend Payout Ratio: 132.08%
Market Cap: $40.01 billion

Like banking, Canada’s telecom sector is almost an oligopoly, with three telecom giants controlling over 90% of the market. One of the big-three is Telus, an aristocrat with 16 years of dividend increases under its belt. This telecom giant covers a wide spectrum of services and products, including voice calls, internet, IPTV, entertainment, etc. The company had over 10.2 million wireless subscribers, two million internet subscribers, and 1.2 million TV subscribers by 2019. 

The future growth of the company, along with the other two telecom giants, depends upon successful 5G deployment and government regulations (to curtail the power that comes with an almost no competition environment). 

The company offers a juicy enough dividend yield, but that’s not what sets it apart from its other, more sizeable peers. The company offers pretty decent capital growth potential. Its ten-year CAGR (dividend-adjusted) comes out to about 12.7% from 2010-2020. The balance sheet of the company is strong enough. Overall, Telus offers a pretty decent combination of growth and dividend yield, especially if you buy if when it’s fairly or underpriced.

6. National Bank of Canada Stock

National Bank of Canada Stock

Ticker: NA
Dividend Yield: 3.57%
Dividend Payout Ratio: 31.70%
Market Cap: $32.61 billion

One of the most common ways of introducing the National Bank of Canada is that it’s not one of the big five. But it’s important enough that the term is sometimes stretched to include this powerful financial institution, and renamed to big-six. It offers a juicy yield (usually), which becomes even more mouthwatering if you buy it during or right after a market crash (when the valuation is substantially down).

Even though it usually offers a sustainable and high-yield (especially for a decade-old aristocrat), a better reason to buy this bank would be its growth potential, for both capital and dividends. It grew at a rate of about 12% every year over the last decade, which is very powerful if you consider the “steadiness” of the Canadian banking sector.

It has an impressive presence, with over 422 branches in Canada (495 worldwide), 2.7 million clients, and about $565 billion worth of assets under management. The only chink in this bank’s armor is its international reach, which is focused primarily on Cambodia, and susceptible to local headwinds.

7. Toronto-Dominion Stock

Toronto-Dominion Stock

Ticker: TD
Dividend Yield: 3.61%
Dividend Payout Ratio: 40.93%
Market Cap: $137.27 billion

TD is one of the big-five. It’s the second-largest bank in the country, the fifth largest (by the number of branches), and sixth largest (by total assets) in North America. It serves over 26 million customers around the globe and 2,300 active locations. It’s also one of the most American banks in Canada, with a huge presence across the border. 

TD has a very long dividend history. The bank has been paying dividends to its investors for over 160 years. Most recently, the bank has been increased its dividends for nine consecutive years. It has a balanced balance sheet and over $1.4 trillion in total assets. Its dividend history and sustainability of dividends is almost similar to the top-dog: Royal Bank of Canada, but TD wins for its recent capital growth pace. 

The bank also has an edge when it comes to active digital customers (over 13 million). That’s the next domain of operation, and less dependency on brick-and-mortar branches results in less operating costs and low higher profit margins. 

8. Exchange Income Fund Stock

Exchange Income Corporation-Exchange Income Corporation Reports
Exchange Income Corporation (CNW Group/Exchange Income Corporation)

Ticker: EIF
Dividend Yield: 5.32%
Dividend Payout Ratio: 145%
Market Cap: $1.58 billion

Like TD, Exchange Income Fund also has a nine-year dividend growth streak, but it offers a more powerful yield and better capital growth prospects. It’s the smallest stock on this list (by both market cap and assets). EIF is an acquisition-oriented company that primarily focuses on aviation and aerospace companies. 

The company has created a diversified portfolio of underlying assets. From material and manufacturing companies to sales companies and a flight college, it has accumulated an extensive range of companies and entities associated with the airline industry. This is one of the reasons why the company suffered a huge blow in 2020, along with airlines around the globe. But despite suffering a major dip in both stock valuation and profits, the company didn’t slash its dividends.

Apart from offering one of the highest yields on this list, the company also offers a pretty decent chance of capital growth. Its 10-year CAGR (dividend-adjusted) is over 14%.

9. Granite REIT Stock

Granite REIT Stock

Ticker: GRT-UN.TO
Dividend Yield: 2.98%
Dividend Payout Ratio: 17.02% 
Market Cap: $6.69 billion

The first real estate stock on this list is also the oldest dividend aristocrats in its respective sector. It has a history of increasing dividends for nine consecutive years. The real estate sector is famous for high dividend yields, and Granite’s yield is actually a bit lower when we consider what other REITs are offering. But there are two reasons why Granite makes this list when others don’t: It’s powerful growth history and a well-diversified portfolio of assets. 

The company has a portfolio of about 100 properties under management, and they are located in nine different countries. The company fared significantly better than other commercial REITs, thanks mostly to the fact that the bulk of its portfolio is made up of modern warehouse properties. And in the world where e-commerce is constantly on the rise, it’s a very good asset class to have, especially in the commercial real estate sphere.  

As for growth, the company has a 10-year CAGR of 27.7%, by far the highest on this list, and powerful enough to double your investment in just three years. And even from a dividend perspective, the company is a viable investment because of its decent yield and very sustainable dividends.

10. Algonquin Power and Utilities Stock

Algonquin Power and Utilities Stock

Ticker: AQN
Dividend Yield: 4.65%
Dividend Payout Ratio: 64.50%
Market Cap: $11.86 billion

Closing the list is Algonquin, another one of my favorite utility stocks, mostly because it combines it all. It focuses on acquiring renewable and green energy assets, which places it in a favorable place in the future where more and more consumers will opt for renewable instead of fossil. The balance sheet of the company is powerfully strong. It offers a pretty juicy yield for an aristocrat, and its capital growth potential is magnificent. 

Another major point in the company’s favor is its diversified asset portfolio. The power section of the company (Liberty Power) owns 35 clean energy facilities, including wind, solar, hydroelectric, and thermal. The assets are spread out over the country and in the US. It also owns and operates over 2,300 miles of water distribution mains and almost 8,400 miles of gas distribution lines. With hundreds of thousands of water, wastewater, gas, and electric connections, the bulk of the company’s income is tied to dependable utility consumers.   

Honorable Mentions: 

Apart from ten of the best dividend aristocrats, there are five more, which I would like to mention.

  1. Goeasy Stock: A financial dividend aristocrat, which increased its dividends at an unprecedented pace, and it’s also a decent growth stock.
  2. Capital Power Stock: It’s another utility company that offers a decent yield and focuses on clean energy.
  3. Enghouse Stock: It’s a tech stock with a low dividend yield but strong capital growth potential.
  4. TC Energy: It’s another pipeline and energy company like Enbridge with a juicy yield. 
  5. Thomson Reuters: It’s a media and information conglomerate with a stellar dividend history.

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I strongly believe that yield isn’t the king, and you have to look at the sustainability of dividends and overall portfolio growth as well. 

Whether you are a trader or a long-term investor, I hope you will benefit from this list of wholesome dividend aristocrats, which can offer so much more than just a high yield.

Best Canadian Dividend Aristocrat Stocks
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Author Bio - Christopher Liew is a CFA Charterholder with 11 years of finance experience and the creator of Wealthawesome.com. Read about how he quit his 6-figure salary career to travel the world here.

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6 thoughts on “10 Best Canadian Dividend Aristocrat Stocks (2022): Earn Passive Income”

  1. I just caught on to this article of yours, and wanted to thank you for it.
    I found it very informative and easy to understand. I am a retired senior and am planning on starting a passive income portfolio and will definitely put some if not all your suggestions in it.
    Thanks again, and hope you are keeping safe and enjoying your stay in Thailand.



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