Top 10 TSX dividend stocks to buy in 2022

Highlights

• TransAlta's dividend yield was almost six per cent at the time of writing.
• Labrador Iron held a dividend yield of11.56 per cent.
• Algonquin reported a YoY growth of 555 per cent in net profit in Q1 2022.

Finding quality Canadian dividend stocks, like any other, involves scrutinizing business strength, prospects and dividend growth capacity to ensure stable income flow. Such TSX stocks have picked up popularity in the current market environment as investors are looking to protect their portfolios against the ongoing instability triggered by inflation and rate hikes.

Some TSX dividend stocks can also offer significant capital gains resulting from business developments and expansion in the long term. Hence, investing in quality dividend stocks could benefit income investors in more than one way. 

TSX stocks with high dividend yields and robust underlying businesses are generally likely to continue paying notable dividends. Thus, let's discuss some of the top 10 TSX dividend stocks that Canadian investors can explore for dividend income.

1.     Labrador Iron Ore Royalty Corporation (TSX: LIF)

Labrador Iron, a metal royalty firm, had a market capitalization of C$ 1.99 billion. Its dividend yield was 11.56 per cent, the highest on this list. The small-cap metal company will pay a quarterly dividend of C$ 0.90 on July 26.

Labrador’s return on equity (ROE), which measures the company’s profitability compared to shareholders’ equity, was over 60 per cent. Its profit on capital invested in assets, termed return on assets (ROA), was 45.51 per cent.

2.     IGM Financial Inc (TSX: IGM)

Non-bank asset management company IGM had a dividend yield of 6.5 per cent. The financial service company will pay C$ 0.563 as a quarterly dividend on July 29.

IGM Financial, a member of Power Financial group, is also engaged in the wealth management business. The asset management company had a market capitalization of C$ 8.27 billion and an ROE of roughly 16 per cent.

Also read: 5 top TSX dividend oil & gas stocks to buy for July as prices rocket

3.     TransAlta Renewables Inc (TSX: RNW)

TransAlta Renewables is a fully integrated utility company that generates and transmits electricity. The mid-cap company holds gas pipelines and also owns renewable power production facilities, including solar and wind farms.

TransAlta doles out monthly dividends (currently C$ 0.078 per share). Its dividend yield was almost six per cent.

4.     Enbridge Inc (TSX: ENB)

Enbridge owns and manages oil and natural gas pipeline networks across the United States and Canada to transport hydrocarbons. The large-cap energy company had a dividend yield of more than six per cent. ENB doles out dividends every quarter ( C$ 0.86 per share paid on June 1).

5.     Keyera Corp (TSX: KEY)

Keyera is a mid-cap midstream company serving the oil and gas industry. Keyera delivers C$ 0.16 apiece as a dividend every month (next scheduled on July 15).

The energy company recorded a net profit of C$ 113.79 million in the first three months of FY2022 compared to 85.82 million a year ago. Its balance sheet at the end of Q1 2022 reflected an increased net debt of C$ 3.39 billion, higher than C$ 3.05 billion on December 31, 2021.

Also read: 5 TSX stocks to buy for +5% dividend yield - GWO, ENB, RNW, MFC, SRU

6.     Great-West Lifeco Inc (TSX: GWO)

Insurer Great-West posted a dividend yield exceeding six per cent. On the financial front, its base earnings zoomed to C$ 809 million in Q1 2022, reflecting a year-over-year (YoY) growth from C$ 739 million in Q1 2021. The Canadian insurance company also saw its net profit spike from C$ 707 million in Q1 2021 to C$ 770 million in the latest quarter. Great-West doles out dividends on a quarterly basis (C$ 0.49 per share to be paid on June 30).

7.     Manulife Financial Corporation (TSX: MFC)

Insurer and wealth manager Manulife has a dividend yield of over six per cent. The debt-to-equity (D/E) ratio for MFC was 0.26, expressing that financial service company mainly finances from equity sources rather than debt.

The large-cap financial company pays (C$ 0.33 per share) quarterly dividends. The insurance company posted a net profit of C$ 2.97 billion attributable to shareholders in Q1 2022, a significant growth from C$ 783 million a year ago.

8.     Gibson Energy Inc (TSX: GEI)

Oil infrastructure firm Gibson provides crude oil and natural gas collection, storage and processing solutions. The mid-cap energy firm has a dividend yield of over six per cent. On July 15, this TSX energy firm will deliver C$ 0.37 per share as a quarterly dividend to its shareholders. The energy infrastructure firm held an ROE of nearly 26 per cent.

9.     BCE Inc (TSX: BCE)

BCE announced to deploy a 3500 MHz wireless spectrum and provide 5G+network to Canadians. The wireless internet provider held a dividend yield of nearly six per cent. The C$ 56 billion market cap company reported net profit growth of 36 per cent in Q1 2022 compared to Q1 2021. The telecom company also posted a capital expenditure of C$ 952 million in the latest quarter.

10.  Algonquin Power & Utilities Corp (TSX: AQN)

Algonquin Power & Utilities is a diversified utility company with fully integrated operations, including power production, transmission and distribution. The utility company recorded a dividend yield of 5.57 per cent.

Algonquin will disburse US$ 0.181 apiece as a quarterly dividend on July 15. The large-cap electric utility company reported that its revenue zoomed by 16 per cent and net profit swelled by 555 per cent in Q1 2022 compared to Q1 2021.

Also read: 2 TSX dividend stocks to buy for your retirement portfolio - BCE and RY

Please note, the above content constitutes a very preliminary observation based on the industry, and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.