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10 Canadian Dividend Stocks with Over 3% Yield

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·8 min read
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  • CM
  • BNS
  • SJR
  • TU
  • CNQ
  • KO
  • PG
  • JNJ
  • PH

In this article, we discuss the 10 Canadian dividend stocks with over 3% yield. If you want to skip our detailed analysis of these stocks, go directly to the 5 Canadian Dividend Stocks with Over 3% Yield.

Regulators in Canada recently allowed banks and insurers — companies that comprise more than 30% of the total market value of the Toronto Stock Exchange (TSX) — to resume dividend hikes, pushing the market to new highs as restrictions on executive compensations and share buybacks were also lifted. According to a report by news agency Reuters, 18 companies on the TSX posted 52-week highs on November 5. The positive sentiment around the Canadian economy was lifted by the earnings season, as several firms posted market-beating numbers.

The lifting of curbs is also a sign that the Canadian economy has now emerged out of the COVID-19 crisis. The Canadian government had imposed the restrictions on dividend hikes and shares buybacks at the height of the virus panic in March 2020. It had also eased requirements for cash stockpiles at the banks in a bid to use the extra capital to loan to businesses and households battling the pandemic. Barclays analyst John Aiken told The Star last week that large-cap banks could hike dividends by up to 45% to meet standard targets.

According to a report in the Insurance Journal, the six biggest banks in Canada — Royal Bank of Canada, Toronto-Dominion Bank, Bank of Nova Scotia, Bank of Montreal, Canadian Imperial Bank of Commerce and National Bank of Canada — were sitting on cash stockpiles of around C$49 billion at the end of July this year. Brian Madden, the portfolio manager at Goodreid Investment Counsel, told the publication that this had created an impetus for the valuation multiples to expand in the coming months.

Peter Routledge, the chief of the Office of the Superintendent of Financial Institutions in Canada, had earlier informed the Canadian media that the financial risks of the virus had eased and the economy was stable enough to resume normal service. Following the lifting of curbs, the S&P/TSX composite index at the TSX climbed 0.43% to reach 21,433.4 points. Banks and finance stocks in general gained 0.8%. Investors who are eager to profit from this boom in the Canadian economy should check out some top value plays in the market.

In addition to some top Canadian companies that have impressive yields, discussed in detail below, there are some dividend stocks in the US that investors could explore as well. These include Johnson & Johnson (NYSE:JNJ), The Procter & Gamble Company (NYSE:PG), The Coca-Cola Company (NYSE:KO), Parker-Hannifin Corporation (NYSE:PH), and Lowe's Companies, Inc. (NYSE:LOW), among others. Even hedge funds are bullish on these companies, even as growth stocks disrupt the market.

Photo by Dan Dennis on Unsplash

The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 86 percentage points since March 2017. Between March 2017 and July 2021 our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by more than 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.

Our Methodology

Here is our list of the 10 Canadian dividend stocks with over 3% yield. These are arranged according to their forward dividend yields. The business fundamentals of each firm are discussed alongside growth catalysts and latest developments to provide readers with some context so they can make more informed investment decisions.

Canadian Dividend Stocks with Over 3% Yield

10. Shaw Communications Inc. (TSX:SJR-B.TO)

Forward Dividend Yield: 3.30%

Shaw Communications Inc. (TSX:SJR-B.TO) operates as a connectivity company offering cable, satellite, and wireless services. It recently posted earnings for the fourth fiscal quarter, reporting earnings per share of C$0.50, beating market predictions by C$0.15. The revenue over the period was C$1.3 billion, up more than 2% year-on-year. It also declared a monthly dividend of $0.0985 per share, in line with previous.

Rogers Communications, a rival of Shaw Communications Inc. (TSX:SJR-B.TO), is presently moving forward with a C$26 billion deal for purchase of the latter. As competitors like BCE oppose the deal, a Canadian antitrust regulator is looking into the deal on orders of a court.

However, there has been a fight for control of the board at Rogers, pushing the stock to a seven-month low in late October. The drama has not affected Shaw Communications Inc. (TSX:SJR-B.TO), which is up 66% in the past twelve months.

Just like Johnson & Johnson (NYSE:JNJ), The Procter & Gamble Company (NYSE:PG), The Coca-Cola Company (NYSE:KO), Parker-Hannifin Corporation (NYSE:PH), and Lowe's Companies, Inc. (NYSE:LOW), Shaw Communications Inc. (TSX:SJR-B.TO) is one of the stocks attracting the attention of elite investors.

9. Canadian Natural Resources Limited (TSX:CNQ.TO)

Forward Dividend Yield: 3.57%

Canadian Natural Resources Limited (TSX:CNQ.TO) operates as an integrated oil and gas firm. The company operates in Canada, Europe, and off the shore of Africa. At the end of 2020, it had total proved oil and gas liquid reserves of 10,528 million barrels. The stock is up 150% over the past twelve months as demand for oil rises in the post-pandemic economy. The increase in prices of oil is also likely to benefit the film in the coming months.

Canadian Natural Resources Limited (TSX:CNQ.TO) has a market cap of $49 billion and posted more than $13 billion in revenue last year. It is headquartered in Calgary, the energy capital of Canada, and was founded in 1973.

Canadian Natural Resources Limited (TSX:CNQ.TO) has an impressive dividend history. On November 4, the firm declared a quarterly dividend of C$0.5875 per share, an increase of more than 25% from the previous dividend of C$0.47 per share.

8. Canadian Imperial Bank of Commerce (TSX:CM.TO)

Forward Dividend Yield: 3.90%

Canadian Imperial Bank of Commerce (TSX:CM.TO) is a diversified financial services firm based in Toronto. The company recently announced that it had signed an agreement with retail giant Costco to become the exclusive issuer of Costco Mastercard in Canada. As part of the deal, the bank will take charge of the Canadian Costco credit card portfolio. The portfolio has outstanding balances of more than $3 billion.

Canadian Imperial Bank of Commerce (TSX:CM.TO) has solid fundamentals. The company recently posted earnings for the third quarter, reporting earnings per share of C$3.93, beating predictions by C$0.54.

Canadian Imperial Bank of Commerce (TSX:CM.TO) also declared a quarterly dividend of C$1.46, in line with previous. The stock is being positively covered in the US after the firm announced a deal with software giant Microsoft to use the Azure cloud platform for business.

7. The Bank of Nova Scotia (TSX:BNS.TO)

Forward Dividend Yield: 4.34%

The Bank of Nova Scotia (TSX:BNS.TO) is another Canadian banking firm with an impressive dividend yield. Although it is primarily based in Canada, the bank provides financial services in the US, Mexico, Columbia, and the Caribbean. The firm beat market estimates on earnings per share in the third quarter results but missed on revenue. It also declared a quarterly dividend of C$0.90 per share, in line with previous, in late August.

In the third quarter, the earnings beat of The Bank of Nova Scotia (TSX:BNS.TO) narrowed as compared to the previous three months, largely because of a drop in demand for loans amid uncertainty around the spread of the Delta variant of COVID-19.

The Bank of Nova Scotia (TSX:BNS.TO) stock is up 53% in the past twelve months. The company has a market cap of over $80 billion and posted more than $18 billion in revenue last year.

6. TELUS Corporation (TSX:T.TO)

Forward Dividend Yield: 4.47%

TELUS Corporation (TSX:T.TO) is an integrated telecommunications firm. It recently raised the quarterly dividend payout by 3.5%, declaring a dividend of C$0.3274, up from previous dividend of C$0.3162. Although the firm managed to beat market estimates on earnings per share for the third quarter, it missed them on revenue. The firm is among a host of communications stocks opposed to the merger of Rogers and Shaw, two Canadian telecom giants.

In early September, TELUS Corporation (TSX:T.TO) had announced that it would be making a $90 million investment in the Greater Montreal area to improve the 5G infrastructure, expanding the services to serve 70 more communities in the area.

TELUS Corporation (TSX:T.TO) also recently revealed that it would be partnering up with Arlington Street Investments, an urban development firm, to expand the smart building footprint in Calgary, a business hub in Canada.

In addition to Johnson & Johnson (NYSE:JNJ), The Procter & Gamble Company (NYSE:PG), The Coca-Cola Company (NYSE:KO), Parker-Hannifin Corporation (NYSE:PH), and Lowe's Companies, Inc. (NYSE:LOW), TELUS Corporation (TSX:T.TO) is one of the stocks on the radar of institutional investors.

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Disclosure. None. 10 Canadian Dividend Stocks with Over 3% Yield is originally published on Insider Monkey.