Best Dividend Stocks Canada

List of Best Dividend Stocks In Canada

Updated on November 1, 2023.

This list of best Canadian dividend stocks is generated by an automated analysis process that i’ve built in Python and run monthly.

The goal of the automated process is to quickly scan and identify Canadian dividend stocks that…

• Pay a dividend with a meaningful forward dividend yield
• Have a dividend that relatively safe (from being cut) and stable
• Have consistent dividend growth or potential to grow the dividend over time

The output is the list below

Next – more on where I source my stock data and the specific criteria I use to filter my list of stocks.

Best Dividend Stock Screener Filters

I source the data for my automated process from TradingView.com.

Here are the criteria I used to land my list of best dividend stocks on the TSX.

The starting point is all TSX stocks with a market cap of >$0.5 Billion.

Dividend Stock Performance Heatmap

Let’s look at our dividend stock price performance over different durations.

This will help us understand what dividend stocks have gone up or declined over different time horizons, giving us a better picture of what stocks may represent an opportunity.

For any dividend stock that has materially declined over the last year, it’s worth digging further to understand why that is the case. If the underlying business is deteriorating and on a downward trajectory, it will be worth understanding why and if that has any implications for the dividend going forward.

Dividend Stock Yield vs Payout Ratio

It is helpful to understand the relationship between dividend yield and payout ratio.

Reminder – the dividend payout ratio is the percentage of net income that is a company is paying out as a dividend. Lower is better.

The sweet spot is stocks with a relatively higher yield and relatively lower payout ratio.

Any stock to the right of the red line has a >100% payout ratio and should be considered with caution. Technically these companies are payout out a dividend that exceeds their net income over the past 12 months, which isn’t sustainable over the longer term. Worth digging further into these stocks to assess whether the dividend is safe.

Dividend Stock Valuation

The other thing to consider when investing in dividend stocks is whether they are expensive or cheap on a relative valuation basis.

There are many ways to look at this. One of the quick ways to understand which dividend stocks may represent good value is One of the quicker ways is simply looking at the P/E or price to earnings ratio.

Dividend Stocks to the right on the above chart are relatively expensive based on price to earnings ratio vs. stocks on the left.