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Whether a beginning investor or an experienced one, holding quality dividend stocks in a portfolio can be a wise decision. Incorporating dividend stocks not only provides steady income but also increases the chances of capital appreciation in the long term. Many Canadian companies have a decades-long history of paying and increasing dividends, making them reliable choices for income-focused investors.
Here are two top Canadian dividend stocks offering both stability and growth potential for long-term investors, irrespective of short-term market uncertainties.
Canadian Natural Resources (TSX:CNQ)
Canadian Natural Resources is a reliable, large-cap dividend stock in Canada worth adding to any portfolio. This Calgary-based oil and gas producer has a market cap of $98.8 billion, with its stock trading at $46.25 per share after a 27.5% surge.
Despite the recent increase in share prices, CNQ stock still offers a decent 4.5% annualized dividend yield. This top dividend stock has rewarded investors with quarterly cash distributions for well over two decades. From 2018 to 2023 alone, Canadian Natural’s annual dividend payment per share jumped by around 176%, thanks to its strong financial base and stable cash flows. The company’s adjusted annual earnings rose by 190%, with a 71% increase in total revenue.
Canadian Natural continues its policy of returning significant value to investors, distributing $1.7 billion among shareholders in the first quarter of 2024 alone, including $1.1 billion in dividends and $600 million through share repurchases. Moreover, CNQ’s focus on low capital exposure projects and significant growth opportunities across its asset base makes it one of the best dividend stocks in Canada to buy and hold long-term.
Canadian Imperial Bank of Commerce (TSX:CM)
Canadian Imperial Bank of Commerce (CIBC) is another strong top dividend stock to consider. This Toronto-based bank has a market capitalization of $61.4 billion, making it the fifth-largest bank in Canada. After rallying by around 12% in the last year, CM stock currently trades at $65.15 per share.
CIBC has rewarded its investors with regular dividends for over one and a half centuries, since 1868. In its last five fiscal years, from 2018 to 2023 (ended in October 2023), the bank raised its dividend per share by nearly 29%, from $2.66 to $3.44 per share. At the current market price, it has a 5.5% annualized dividend yield and distributes these payouts every quarter. Canadian Imperial Bank’s adjusted annual earnings have increased by more than 10% in the last five fiscal years, while its total revenue surged by roughly 31%, reflecting its strong underlying fundamentals.
Although higher provisions for credit losses have affected its earnings growth in recent quarters, easing monetary policy and an improving economic scenario in Canada are likely to boost its profitability going forward, brightening its earnings growth outlook. This positive factor, along with its strong balance sheet, provides a solid base for continuing to raise dividends in the future, making CIBC an excellent dividend stock to hold long-term.
Incorporating dividend stocks like Canadian Natural Resources and Canadian Imperial Bank of Commerce into a portfolio can offer both stability and growth potential. These stocks not only provide regular income but also have a strong track record of dividend growth, making them reliable choices for long-term investors.
