By
Mark Brown
on January 26, 2022 Estimated Reading Time: 7 minutes
Canada’s best dividend stocks for 2022
By
Mark Brown on January 26, 2022 Estimated Reading Time: 7 minutes
We’ve graded the largest, most liquid Canadian dividend stocks based on Yield, Stability and Value. To earn top marks, each company must demonstrate its ability to provide a steady flow of income to investors, at a reasonable price.
Looking at the returns some investors seem to be enjoying lately, you can be forgiven if you’ve been questioning the value of your dividend portfolio. Cryptocurrencies have been wild. Tech stocks have been on fire. And companies like GameStop and AMC, the darlings of Reddit trade, have been stratospheric—touching highs of 1,000% at times.
Canada’s best dividend stocks 2022
It may feel like everyone is holding a winning lottery ticket except you, but take a closer look. Many of the high-flying growth stocks peaked in the first few months of 2021 and have since given back large chunks of their gains. There will always be hot sectors to make investors feel invincible. But all too often, they end in an unpredictable and chaotic fashion.
Dividend stocks may look downright dull next to those examples, but they seldom take investors on the same vomit-inducing rides. Of course, 2020 was an obvious exception. Dividend stocks didn’t provide much protection in the early stages of the COVID-19 crisis. Unlike a typical recession where economies gradually slow down, companies experienced a dramatic shift in their business.
Two years later, things still feel unsettled with new challenges looming. Surveying the landscape ahead, adding a little more boring to your portfolio might not be such a bad thing. Inflation is soaring. Interest rates in Canada and abroad seem poised to begin a relentless march higher. And while vaccines have blunted the devastating impact of COVID-19, new variants like Omicron add an unwelcome air of uncertainty, leading to higher volatility and clouding the earnings outlook for many companies.
The case for dividend stocks
With inflation surging, investors are under intense pressure to try and protect their purchasing power. Investors may not have the luxury to sit on the sidelines to wait out the storm. Anyone sitting on cash is taking a risk that inflation will erode their money. Even if inflation is transitory—meaning the high inflation is only temporary—the short-term effects could have lasting implications.
When inflation was under 2% in February 2021, you could protect your purchasing power with something as simple as a GIC yielding 2.5%. More recently, inflation is close to 5%. And it’s been stickier than expected, explains Don Newman, a portfolio manager at Fidelity Investments Canada who oversees $.5 billion across several mandates, including the Fidelity Dividend and Fidelity Dividend Plus Funds. A pinched supply chain, labour shortages and strong consumer demand are putting additional pressures on prices. There are also signs of wage inflation, which add a new long-term dynamic to the inflation picture. Over time inflation will cool, but it could lower your purchasing power by as much as 10% by the time it does.
Investors need something to offset that. “Having a portion of your portfolio in a dividend fund or dividend-paying stocks is a good hedge against inflation,” says Newman. “The alternatives are not as good as they were a few years ago.”
While central banks have been reluctant to make any decision that could derail the recovery, rate increases in 2022 appear to be a foregone conclusion. Markets are pricing in as many as five rate hikes by the Bank of Canada over the next 12 months. The question is whether markets will respond to the rate increases as they have in the past.
Typically, rising rates benefit financials because they’re able to charge more and it helps to boosts their net interest margins, which is better for the bottom line, explains Michael Giordano, vice president investments at Stone Asset Management Ltd. Cyclicals like the industrial and energy sectors also tend to benefit in this type of environment. On the other hand, debt-laden sectors like real estate, utilities and telecoms may face headwinds as rising rates will drive up their borrowing costs.
“Those are sort of the hard and fast ways to play,” says Giordano, who oversees the Stone Dividend Growth Class, which Refinitiv Lipper recently recognized as the best fund over the past five years in the dividend and equity category. He notes that higher rates could also hinder money flow into the high-growth technology names, adding that many tech companies have already experienced a correction.
A year ago, you could have bought anything down 40%. Even if the business wasn’t fantastic, it was unlikely it would continue to trade at such a huge discount, explains Newman. “Now you want to focus on companies growing earnings,” he says.
Dividend-paying stocks are a good place to be right now if you’re looking for yield, says Newman. They’re not overly expensive and have a reasonable outlook, but you have to look at them on a company-by-company basis.
Giordano shares a similar sentiment. “You’ve got to stay disciplined and you got to focus on quality companies,” he says. Larger companies that have the ability to pass on cost increases to consumers will be best positioned to survive in this environment.
For those of you who have been following our dividends coverage over the years, you’ll find the 2022 best class is a little deeper, with 14 companies atop the list, eight more than last year. The average yield of the top stocks is another notable change, sitting at 5.07% this year 2022, although that figure is somewhat inflated by the 23% yield on Labrador Iron Ore Royalty Co. The average yield dips to a respectable 3.66% when you take out that outlier. Sure, it’s a far cry from the 5.2% average in 2021, but it reflects the recovery. For those still learning the basics, the dividend yield is the annual dividend payout divided by the share price. So, as prices rise faster than the payout, yields will fall.
While you may not find any yields above 5% in the A-grade stocks, half of this group still have yields north of 4%. The fact that the yields are still that high is remarkable, considering how much these share prices jumped last year. And despite the uncertainty of the past few years, many companies we looked at managed to maintain—or even increase—their payouts.
Sometimes stocks are cheap for a reason. Looking back, it feels like stocks were on a once-in-a-lifetime sale. Kudos if you were able to capitalize on the rally, but prudent investors will likely do well to return to the fundamentals.
Even though it’s more challenging to find quality names at the right price, he feels there is still an opportunity for active investors. “If there ever was a case for active investing, I believe now’s the time,” says Giordano. “Markets are hitting new highs, but not everybody’s participating. It’s very important to be in the right sector, in the right names.”
Top 100 dividend stocks for 2022
Just because companies were able to preserve their payouts through such a challenging period doesn’t eliminate the risk in the future. The Dividend All-Stars was created 14 years ago to try and identify companies that, based on the data, we think are well-positioned to withstand any shocks, but are also reasonably priced. (You can find our detailed Methodology here.)
Here is a summary of this year’s A-list stocks:
MoneySense A-Team
Company
Ticker (TSX)
Indicated dividend yield
GRADE
Manulife Financial Corp.
MFC
4.50%
A
Canaccord Genuity Group Inc.
CF
1.88%
A
Great-West Lifeco Inc.
GWO
4.56%
A
Labrador Iron Ore Royalty Co.
LIF
23.44%
A
Canadian Natural Resources
CNQ
4.49%
A
Whitecap Resources Inc.
WCP
3.79%
A
Power Corp. of Canada
POW
4.20%
A
Russel Metals Inc.
RUS
4.30%
A
West Fraser Timber Co. Ltd.
WFG
0.95%
A
Canadian Tire Corp.-Class A
CTC.A
2.88%
A
Transcontinental Inc.-Cl A
TCL.A
4.49%
A
B2Gold Corp.
BTO
3.65%
A
Corus Entertainment Inc.
CJR.B
4.26%
A
Westshore Terminals Investment Corp.
WTE
3.59%
A
Labrador Iron’s dividend, which is closely tied to iron ore prices, shot up when the commodity hit record highs in 2021. The company’s share price has since fallen, as iron prices have since come down, driving the yield higher. The indicated yield is calculated by multiplying the last quarterly dividend by four and dividing it by the current share price. If that last dividend payout was higher than what the company forecasts expects in the coming quarters then it could result in an inflated yield.
The B-Team, which performed admirably last year, is also worth exploring. All of the big banks, which all hiked their dividends shortly after we pulled our data, are part of this group.
MoneySense B-Team
Company
Ticker (TSX)
Indicated dividend yield
GRADE
Lundin Mining Corp.
LUN
3.40%
B
Aecon Group Inc.
ARE
4.06%
B
Quebecor Inc.
QBR.B
3.65%
B
Cascades Inc.
CAS
3.39%
B
Parex Resources Inc.
PXT
2.23%
B
Crescent Point Energy Corp.
CPG
2.05%
B
North West Co. Inc.
NWC
4.14%
B
Bank of Nova Scotia
BNS
4.34%
B
Toronto-Dominion Bank
TD
3.39%
B
Cogeco Communications Inc.
CCA
2.80%
B
CIBC
CM
3.91%
B
Canadian Western Bank
CWB
2.81%
B
Sun Life Financial Inc.
SLF
3.13%
B
Stelco Holdings Inc.
STLC
$2.66
B
Suncor Energy Inc.
SU
5.18%
B
Stella-Jones Inc.
SJ
1.67%
B
IGM Financial Inc.
IGM
4.48%
B
Enbridge Inc.
ENB
6.60%
B
Algonquin Power & Utilities
AQN
4.79%
B
Linamar Corp.
LNR
1.03%
B
Intact Financial Corp.
IFC
2.18%
B
Capital Power Corp.
CPX
5.40%
B
Yamana Gold Inc.
YRI
2.64%
B
Laurentian Bank of Canada
LB
3.75%
B
Royal Bank of Canada
RY
3.26%
B
Magna International Inc.
MG
1.94%
B
Pembina Pipeline Corp.
PPL
6.02%
B
Bank of Montreal
BMO
3.02%
B
Barrick Gold Corp.
ABX
1.73%
B
Fairfax Financial Holding Ltd.
FFH
2.38%
B
TC Energy Corp.
TRP
5.61%
B
Centerra Gold Inc.
CG
2.60%
B
Atco Ltd.
ACO.X
4.37%
B
Transalta Renewables Inc.
RNW
4.95%
B
National Bank of Canada
NA
2.70%
B
BCE Inc.
BCE
5.45%
B
Onex Corp.
ONEX
0.42%
B
Arc Resources Ltd.
ARX
3.29%
B
Note: The data for this year’s Dividend All-Stars was adjusted to Nov. 15, 2021. To ensure we captured the true one-year performance, the total returns above are from Oct. 22, 2021.
I agree wholeheartedly with the suggestion of buying on market sell-offs. In most cases, even good stocks get hammered mercilessly for no reason and these present golden opportunities to buy more good stocks at a better price. Difficult to lose money when one does this!!
My portfolio is 100% based on distribution and hold and behold I have none of the tickers in the elite list, none. I guess the sustainability criteria excluded them. When I buy, I only have two criteria’s: the yield must be 10% or more and it must show a positive total return.
Examples of what I have:
(yield at 10% or more when I bought in)
Bombardier Inc preferred shares series 4 (BBD.PR.C) yield = 12.91%
Alaris Equity Partners Income Trust Units (AD.UN) yield = 7.55%
Bridgemarq Real Estate Services Inc (BRE) yield = 9.08%
Inovalis Real Estate Investment Trust (INO.UN) yield = 8.60%
Slate Grocery REIT U (SGR.UN) yield = 9.56%
True North Commercial REIT (TNT.UN) yield = 9.24%
Newport Exploration Ltd (NWX) yield = 10.91%
Diversified Royalty Corp (DIV) yield = 7.97%
(and many more : ENS, FTU.PRB, OSP.PRA, GDV, SBC)
Also, there are ETF’s and Mutual funds that offer interesting distributions, namely:
Evolve US Banks Enhanced Yield ETF (CALL) yield = 8.48%
CI First Asset US & Can Lifeco Income ETF (FLI) yield = 11.67%
BMO Covered Call US Banks ETF (ZWK) yield = 8.44%
CI First Asset Health Care Giants Covered Call ETF (FHI) yield = 9.62%
CI First Asset Tech Giants Covered Call ETF (TXF) yield = 11.00%
Dynamic Energy Income Series F (DYN4434) yield = 11.44%
BMO Monthly High Income II T8 (BMO3064) yield = 9.59%
Dynamic Premium Yield PLUS F (DYN3361) yield = 9.24%
Manulife Fundamental Income D (MMF33647) yield = 11.82%
Sun Life Excel India F (SUNL600) yield = 36,05%
For me, I don’t really care if it’s a company, a trust fund, an ETF or a mutual fund, bottom line, does it offer a good yield and are total returns positive. If they cut the dividends, I can always sell.
I agree with Fred Barnard…Enbridge is the only one on this list that I have – with energy companies under stress would like you to do a deeper dive on this stock
Hi there, can we have more information on Genworth MIC. Company has been sold and has been trading flat at sale price for months. Also not sure if paying dividends in 2021.
Buy low, buy well and hold. If you sell then you need to find something else to buy so, if you bought well, then there may be no need to sell. Unfortunately this philosophy is not 100% but it’s an ideal to strive for.
Stay in the markets that you understand and with corporations that are known. There are a lot of shady characters in the business world.
I’m really curious. Have you ever recommended a mutual fund that includes the best dividend stocks for 2021? I’d be very interested in your recommendation.
Thanks
Due to the large volume of comments we receive, we regret that we are unable to respond directly to each one. We invite you to email your question to [email protected], where it will be considered for a future response by one of our expert columnists. For personal advice, we suggest consulting with a qualified advisor.
It would be interesting to know how the portfolio of Mr. Bussire has fared over the past year. I bought one stock many years ago [ Atlantic Power ] with a dividend of 14%. It tanked and never recovered. The dividend dropped to 2.5 % alongside the diving share price.
Really have to do the research to make sure a company can support the dividend
Since that lesson I focus on the company dynamics with a reasonable dividend.
Every company out there will have its lows and highs. Look for quality, buy on the dip.
A nice yield is secondary and is the icing on the cake.
Holy Moly MS A-Team, I love dividend payers as my base portfolio but several of your “A” selections need reconsideration! I trust people won’t be tempted to buy all your A-list as a portfolio, as it is heavily weighted to the turbulent Resources (6 of 14) and Insurance (3 of 14) industries, leaving less than a majority (5 of 14) to properly diversify across other sectors…you should include a cautionary note to that effect!
When I select dividend payers, I like them to have a good track record of growing sales, earnings, and dividends, and just as important, good forward prospects to ensure my capital is preserved and growing. In addition, I like them to be balanced across the aforementioned, and not like LIF paying over 100% of its earnings relative to earnings…unsustainable. As to LIF, while it might continue to perform, I prefer LUN in this industry with a proven explorer at the helm and a more safe & reasonable dividend of ~3.44%.
I also prefer to buy stocks at a bargain (i.e., “Value” > Price), so I’d be switching your over-priced TCL.A, BTO, and WTE in favour of others with some safety margin, given our turbulent market conditions. Both BTO and WTE also have negative forward growth expectations for sales and earnings, so I would likely prefer EDV and TFII, respectively, for far superior growth prospects and dividend safety. As to TCL.A, I would prefer QBR.A with doubly better growth prospects on earnings and dividend, plus higher dividend safety.
Across your over-weighted mentions for the Insurance industry, I would be focusing on POW and GWO as my top 2 selections with better growth prospects, more stable price action, and dividend safety, versus MFC.
Finally, while CTC.A is a frequented place, its negative sales growth prospects would have me favouring PKI’s better sales & earnings growth prospects, plus higher dividend rate.
I am also surprised that none of Canada’s Schedule A banks made your A-list, with maybe exception of TD with its negative sales forecast, and lower earnings forecast relative to the other majors!?!
So I hope your readers will pick n’ choose from your A & B lists to construct a diversified dividend portfolio, focusing on the better performing industries, and with top past & future performers. I would certainly have switched many selections between your A & B lists, plus added some precautionary notes for your readers!
I would love to hear more from the commenters who love Enbridge. I have been nervously eyeing it for a long time, but their payout ratio is SO high – I don’t understand how this can be sustainable?
Do any dividend investors here use the “dividend triangle” method in analyzing their dividend stock buys?
I just wanted to throw in my 2 cents on this discussion, we are very lucky in Canada to have so many passive investment stocks to choose from, I also buy some USA ones in my rrsp account, as far as Canadian dividend paying stocks I like are 5 big banks, as well as our energy sector , really like ENB, PPL, CPX all have proven track records, even during bear markets like today , I also like split funds like ENS, RS, GDV, DFN other solid pi stocks to consider are EIT, HYLD, HDIV, these last 2 are fairly new but both have decent yields and huge potential for consistent monthly income , btw the last 7 ,as well as PPL , pay monthly , anyways there are some discounted stocks these days , will probably last most the year , possibly longer but I do believe we will level off by the 4th qu of this year , just google dividend history and you can see how well the stocks I have mentioned have done , some over the last 30+ years , I like BCE AND Telus too, both down 15-20% right now from 52 week highs.
What is the calculation behind the Methanex at a “payout ratio is still below 30%” ?
Can you comment on Emera? They were on the list for a number of years. Wondering why they fell out of favour.
how is enbridge a b dividend stock. this is the only stock I hold in my rrsp and the only one I have confidence in their dividend commitment.
I agree wholeheartedly with the suggestion of buying on market sell-offs. In most cases, even good stocks get hammered mercilessly for no reason and these present golden opportunities to buy more good stocks at a better price. Difficult to lose money when one does this!!
My portfolio is 100% based on distribution and hold and behold I have none of the tickers in the elite list, none. I guess the sustainability criteria excluded them. When I buy, I only have two criteria’s: the yield must be 10% or more and it must show a positive total return.
Examples of what I have:
(yield at 10% or more when I bought in)
Bombardier Inc preferred shares series 4 (BBD.PR.C) yield = 12.91%
Alaris Equity Partners Income Trust Units (AD.UN) yield = 7.55%
Bridgemarq Real Estate Services Inc (BRE) yield = 9.08%
Inovalis Real Estate Investment Trust (INO.UN) yield = 8.60%
Slate Grocery REIT U (SGR.UN) yield = 9.56%
True North Commercial REIT (TNT.UN) yield = 9.24%
Newport Exploration Ltd (NWX) yield = 10.91%
Diversified Royalty Corp (DIV) yield = 7.97%
(and many more : ENS, FTU.PRB, OSP.PRA, GDV, SBC)
Also, there are ETF’s and Mutual funds that offer interesting distributions, namely:
Evolve US Banks Enhanced Yield ETF (CALL) yield = 8.48%
CI First Asset US & Can Lifeco Income ETF (FLI) yield = 11.67%
BMO Covered Call US Banks ETF (ZWK) yield = 8.44%
CI First Asset Health Care Giants Covered Call ETF (FHI) yield = 9.62%
CI First Asset Tech Giants Covered Call ETF (TXF) yield = 11.00%
Dynamic Energy Income Series F (DYN4434) yield = 11.44%
BMO Monthly High Income II T8 (BMO3064) yield = 9.59%
Dynamic Premium Yield PLUS F (DYN3361) yield = 9.24%
Manulife Fundamental Income D (MMF33647) yield = 11.82%
Sun Life Excel India F (SUNL600) yield = 36,05%
For me, I don’t really care if it’s a company, a trust fund, an ETF or a mutual fund, bottom line, does it offer a good yield and are total returns positive. If they cut the dividends, I can always sell.
🙂
I agree with Fred Barnard…Enbridge is the only one on this list that I have – with energy companies under stress would like you to do a deeper dive on this stock
Hi there, can we have more information on Genworth MIC. Company has been sold and has been trading flat at sale price for months. Also not sure if paying dividends in 2021.
Why is this an A list stock for 2021?
Thanks
Denis Bussire, that’s a fantastic list! Thank you, it’s exactly what I’ve been searching for.
Fred Flinstone taught me ‘Buy low…Sell high’ at 8 yrs old….Funny how most don’t
Manulife? Really? Held this stock for 3 years and has gone nowhere but down until lately and after it went up in went right back down.
Buy low, buy well and hold. If you sell then you need to find something else to buy so, if you bought well, then there may be no need to sell. Unfortunately this philosophy is not 100% but it’s an ideal to strive for.
Stay in the markets that you understand and with corporations that are known. There are a lot of shady characters in the business world.
I’m really curious. Have you ever recommended a mutual fund that includes the best dividend stocks for 2021? I’d be very interested in your recommendation.
Thanks
Due to the large volume of comments we receive, we regret that we are unable to respond directly to each one. We invite you to email your question to [email protected], where it will be considered for a future response by one of our expert columnists. For personal advice, we suggest consulting with a qualified advisor.
It would be interesting to know how the portfolio of Mr. Bussire has fared over the past year. I bought one stock many years ago [ Atlantic Power ] with a dividend of 14%. It tanked and never recovered. The dividend dropped to 2.5 % alongside the diving share price.
Really have to do the research to make sure a company can support the dividend
Since that lesson I focus on the company dynamics with a reasonable dividend.
Every company out there will have its lows and highs. Look for quality, buy on the dip.
A nice yield is secondary and is the icing on the cake.
Holy Moly MS A-Team, I love dividend payers as my base portfolio but several of your “A” selections need reconsideration! I trust people won’t be tempted to buy all your A-list as a portfolio, as it is heavily weighted to the turbulent Resources (6 of 14) and Insurance (3 of 14) industries, leaving less than a majority (5 of 14) to properly diversify across other sectors…you should include a cautionary note to that effect!
When I select dividend payers, I like them to have a good track record of growing sales, earnings, and dividends, and just as important, good forward prospects to ensure my capital is preserved and growing. In addition, I like them to be balanced across the aforementioned, and not like LIF paying over 100% of its earnings relative to earnings…unsustainable. As to LIF, while it might continue to perform, I prefer LUN in this industry with a proven explorer at the helm and a more safe & reasonable dividend of ~3.44%.
I also prefer to buy stocks at a bargain (i.e., “Value” > Price), so I’d be switching your over-priced TCL.A, BTO, and WTE in favour of others with some safety margin, given our turbulent market conditions. Both BTO and WTE also have negative forward growth expectations for sales and earnings, so I would likely prefer EDV and TFII, respectively, for far superior growth prospects and dividend safety. As to TCL.A, I would prefer QBR.A with doubly better growth prospects on earnings and dividend, plus higher dividend safety.
Across your over-weighted mentions for the Insurance industry, I would be focusing on POW and GWO as my top 2 selections with better growth prospects, more stable price action, and dividend safety, versus MFC.
Finally, while CTC.A is a frequented place, its negative sales growth prospects would have me favouring PKI’s better sales & earnings growth prospects, plus higher dividend rate.
I am also surprised that none of Canada’s Schedule A banks made your A-list, with maybe exception of TD with its negative sales forecast, and lower earnings forecast relative to the other majors!?!
So I hope your readers will pick n’ choose from your A & B lists to construct a diversified dividend portfolio, focusing on the better performing industries, and with top past & future performers. I would certainly have switched many selections between your A & B lists, plus added some precautionary notes for your readers!
Great dividend stocks. I am impressed by the list from Denis Bussire. Very helpful thank you !!
I would love to hear more from the commenters who love Enbridge. I have been nervously eyeing it for a long time, but their payout ratio is SO high – I don’t understand how this can be sustainable?
Do any dividend investors here use the “dividend triangle” method in analyzing their dividend stock buys?
Anyone use dividend ETFs like VDY?
Wow – I’d be really careful with this list.
Have you seen Manulife’s share price and/or dividend troubles over the past 20+ years?
No thank-you.
I just wanted to throw in my 2 cents on this discussion, we are very lucky in Canada to have so many passive investment stocks to choose from, I also buy some USA ones in my rrsp account, as far as Canadian dividend paying stocks I like are 5 big banks, as well as our energy sector , really like ENB, PPL, CPX all have proven track records, even during bear markets like today , I also like split funds like ENS, RS, GDV, DFN other solid pi stocks to consider are EIT, HYLD, HDIV, these last 2 are fairly new but both have decent yields and huge potential for consistent monthly income , btw the last 7 ,as well as PPL , pay monthly , anyways there are some discounted stocks these days , will probably last most the year , possibly longer but I do believe we will level off by the 4th qu of this year , just google dividend history and you can see how well the stocks I have mentioned have done , some over the last 30+ years , I like BCE AND Telus too, both down 15-20% right now from 52 week highs.