10 Best Canadian Dividend Stocks for September 2021

The best Canadian dividend stocks are always changing from an entry point perspective. We know that the stock market will grow over time, but on any day, stock prices will fluctuate and provide opportunities to invest.

The opportunities will vary every month and that’s why it’s important to have a systematic approach to understanding which dividend stocks are an opportunity at a point in time.

An opportunity can be for a stock you already own or simply for a new addition to your portfolio.

Top 10 Canadian Dividend Stocks

Here are the top 10 Canadian dividend stocks for this month, see below for the details. This is obviously a snapshot in time at the time of writing, many factors could change the rankings.

Here is a quick excerpt on the top 10 dividend growth stocks opportunities identified through the Canadian Dividend Stock Screener.

Stay on top of your next investment decision with the Dividend Snapshot Canadian Dividend Screener. Review the Chowder Rule along with the 3, 5, and 10 year ratios for dividend growth, EPS growth and the payout ratio to pick a solid investment for your portfolio.

The monthly top 10 rarely have the same top 10 stocks. Be sure to come back, or better yet, follow the top 10 with the Canadian Dividend Screener.

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#1 – Algonquin Power & Utilities Corp

Algonquin Power & Utilities is a diversified utility company in North America with $10 billion in total assets. The company engages in the generation, transmission, and distribution of water, gas, and electricity to communities across the U.S. It also has renewable energy business.

As a growing renewable energy company, Algonquin Power owns a strong portfolio of long term contracted wind, solar and hydroelectric assets with 1.5 GW of total installed capacity.

The company through its subsidiaries owns an equity interest in more than 39 clean energy facilities. Algonquin Power operates through two subsidiaries: Liberty Utilities (64% of 2018 earnings) and Liberty Power (36%).

The company has more than 50 power generation facilities and 20 utilities across North America. Algonquin’s utility business serves nearly 770,000 customers in twelve states across the U.S., through 1,200 miles of electrical transmission lines and 100 miles of natural gas transmission pipelines.

Key Investment Data

 

#2 – Manulife

Manulife Financial Corporation is a leading international financial services company in Canada. The company provides financial advice, insurance, as well as wealth and asset management solutions for individuals, groups, and institutions.

As of March 2018, Manulife had $1.1 trillion assets under management making it one of the largest life insurance companies in the world. More than 80% of its assets are fixed income, of which 98% is investment grade.

Manulife offers unique product offerings for different markets it serves. The company provides a suite of financial protection and wealth management solutions to meet the current and future needs of individual and group customers. The company also owns reputed brands like Manulife and John Hancock in the USA.

Manulife serves 26 million customers in the USA, Canada, and Asia. With more than 125 years of experience, the company has developed strong customer relations and a deep understanding of their financial needs. Clients look to Manulife for reliable and intelligent financial solutions.

Key Investment Data

 

#3 – Canadian Tire Corporation

CTC.A - Canadian Tire Canadian Tire Corporation is a leading retail company in Canada having a presence in the retail, finance and real estate businesses.

The company’s retail and financial services businesses include Canadian Tire, PartSource, Petroleum, SportChek, Mark’s, Helly Hansen, CT REIT, and a Financial Services division. Retail is the larger segment accounting for more than 90% of total revenues, while financial services segment constitutes the remainder.

The financial services segment offers credit cards and other financial products.

Canadian Tire is one of Canada’s most shopped general merchandise retailers. The company operates through a huge network of 1700 retail outlets and gas bars. It provides a wide range of products in the automotive, tools & hardware, home & essentials, sports and outdoor living categories.

Canadian Tire also has a 76% interest in CT REIT, a closed end real estate investment trust in Canada, of which it is the primary tenant. Customers trust the Canadian Tire brand for its product quality and leading reputation.

Investment Data
 

#4 – TD Bank

Toronto Dominion Bank is a leading Canadian bank providing banking products and services in Canada and the US. It is the fifth largest bank in North America by total assets.

The bank was formed as a result of amalgamation of The Bank of Toronto and The Dominion Bank in 1955. Retail earnings accounts for more than 90% of TD Bank’s total earnings.

The bank operates through three business segments: Canadian retail banking (53% of latest income), U.S. retail banking (47%) and wholesale banking. TD Bank offers a wide range of retail, small business and commercial banking products and services to more than 25 million customers worldwide and almost 13 million digital customers.

Toronto Dominion bank operates through more than 1,250 locations along the Northeast, Mid-Atlantic, Metro DC, the Carolinas and Florida. It enjoys #1 or #2 market share positions for most of its retail products in Canada. The bank operates in four of the top ten metropolitan areas and seven of the ten wealthiest states in the U.S.

Key Investment Data

 

#5 – Canadian Natural Resources

Canadian Natural Resources is a diversified and independent energy producer in the world. It is the largest independent natural gas and heavy crude oil producer in Canada. 

It operates a balanced mix of natural gas, light crude oil, heavy crude oil, and oil sands. The company holds some of the best oil sand assets in North America, particularly thermal in situ properties, having tremendous growth potential.

The company’s business can be broadly classified into Exploration and Production (North America, North Sea, offshore Africa), Oil Sands Mining and Upgrading, and Midstream and Refining segments. The Exploration and Production segment is Canadian Natural’s core business, while the other two businesses provide a nice diversification.

Canadian Natural has a balanced mix of natural gas, light crude oil, heavy crude oil, bitumen, and SCO. The company also owns midstream assets consisting of two crude oil pipeline systems and cogeneration plants, which enables the transportation of heavy crude oil in international markets.

Candian Natural derives nearly 89% of its total revenue from the sale of crude oil and NGLs and the remaining 11% from natural gas.

Key Investment Data

 

#6 – Alimentation Couche-Tard Inc.

Alimentation Couche-Tard is one of the largest Canadian companies and the owner of several Canadian convenience stores. The company also supplies road transportation fuel to approximately 1,300 locations in the U.S. and offers stationary energy and aviation fuel.

Couche-Tard caters to more than 9 million global customers daily, offering them merchandise and services (55% of 2018 revenues), motor fuel (43%) and other (2%).

As a leading independent convenience store operator, Couche-Tard owns a network of nearly 10,000 convenience stores in 48 states in the U.S., ten provinces in Canada, as well as other countries.

It operates more than 16,000 stores worldwide. By geography, the US is its largest market accounting for 67% of 2018 revenues, followed by Europe (20%) and Canada (13%). The company operates through Couche-Tard and Mac’s brands in Canada and Circle K globally.

With nearly four decades of experience, Couche-Tard has adapted to the changing customer habits and preferences and has a sound track record of successful acquisitions over the last decade.

Investment Data
 

#7 – Scotia Bank

BNS - Small Scotiabank is a leading international bank in Canada and a leading financial services provider in the Americas. The bank has a presence in personal and commercial, corporate and investment banking, wealth management and capital markets, and serves 25 million customers worldwide.

With a rich history of 185 years, the bank has developed an extensive network of over 960 branches and more than 3,600 automated banking machines in Canada, and 1,800 international branches.

Scotiabank has a wide geographic presence in attractive markets in Latin America (71% of revenues), Caribbean & Central America (25%) and Asia (4%). It operates through Canadian banking (49% of earnings), international banking (36%) and global banking and markets (15%) business lines.

Scotiabank is highly diversified by products, customers and geographies, which reduces risk and volatility. The bank generates nearly 80% of its earnings from high quality and stable businesses which gives stability to cash flows.

Key Investment Data

 

#8 – Industrial Alliance

IAG - Industrial Alliance Industrial Alliance is a leading insurance and wealth management company in Canada. The company manages more than $180 billion in assets and over 4 million client accounts.

It also has a presence in the U.S. Industrial Alliance offers a broad range of savings, retirement, group benefits, defined contribution, defined benefit plans, insured annuities, etc. to its vast base of clients consisting of individuals, companies, and organizations.

It also distributes creditor insurance products, car loan financing, and property & casualty products through a Canada wide distribution network. Industrial Alliance operates through individual insurance (15% of 2018 revenues), individual wealth management (40%), group insurance (18%), group savings and retirement (18%), U.S. operations (5%) and other (4%) divisions.

The company deploys an extensive distribution network, With more than a century old existence, Industrial Alliance has developed the necessary expertise and portfolio of products and solutions to cater to the diverse financial needs of its clients. The company is targeting to grow its EPS by at least 10% annually till 2022.

Key Investment Data

 

#9 – Pembina Pipeline

PPL - Pembina Pipeline Pembina Pipeline is a leading midstream and transportation service provider in North America. The company is known for providing safe and cost-effective transportation solutions since the last six decades.

The company offers a wide range of midstream and marketing services to the energy sector. It owns an extensive network of pipelines that transport crude oil, natural gas and natural gas liquids produced primarily in western Canada.

It also runs gathering and processing facilities and an oil and natural gas liquids infrastructure business.

Pembina owns a large asset base consisting of pipelines and facilities, which is difficult for newcomers to replicate. As a leading energy infrastructure company, Pembina serves multiple basins and markets throughout Canada and the US.

The company has 19 gas processing facilities and 6 billion cubic feet per day of net gas processing capacity. Pembina owns and operates an 18,000 km pipelines with a total capacity of 3 million barrels of oil equivalent per day.

Key Investment Data

 

#10 – Stella-Jones Inc.

SJ Stella Jones Stella-Jones is a North America’s premier provider of pressure treated wood products. The company enjoys a strong reputation for providing reliable high quality wood products in the North American market.

Stella-Jones operates through two business segments, the production and sale of pressure treated wood, and logs and lumber.

The company’s product mix consists of railway ties (30%), residential lumber (25%), utility poles (32%), logs and lumber (8%), and industrial products (5%). The company owns 37 wood treating facilities spread across sixteen U.S. states and five Canadian provinces, and a huge distribution network across North America.

By geography, the US is Stella-Jones’ largest market accounting for nearly 70% of its total sales, while Canada constitutes the remaining 30%. The company also has a small presence in Latin and South American markets.

Leading railroad companies, telecom providers, and electrical transmission utilities are Stella-Jones biggest customers.

Key Investment Data

 

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Ranking Methodology

The top 10 stocks identified above are based on a score calculated using a number of financial data points from the companies. In the end, the score is generated from following five key indicators:

  • 52-Week Range: Trend over the past 52 weeks. Is the stock pulling back from a 52 week high?
  • P/E Ratio: Is the stock price running away from its earnings?
  • Revenue Growth: Is the revenue growing? Growing revenue is important. We don't want to be fooled by share buybacks and cost management only.
  • Dividend Yield: Is the yield attractive? Usually could identify a pullback if the yield starts to go up or major trouble if it goes too high.
  • Dividend Growth: Uses dividend growth and the Chowder Rule. Is the company capable of growing the dividend consistently?
  • Dividend Payout Ratio: Uses historical averages to put today's ratio in perspective. Is the company able to grow the dividend at the same rate it increases its earnings?

The generated score is meant to assess an entry point opportunity based on historical and today's numbers. It completely ignores the business quality, the quality of the company is for every investor to assess. My stock selection process breaks down the quantitative and qualitative assessments investors should establish to pull the trigger before buying.

If you are interested in more details, the Canadian Dividend Screener provides many more data points to help make your investment decision.

Dividend growth investing works and you can generate a healthy retirement income but you have to buy individual stocks. If you are not comfortable with holding individual stocks, you can always buy dividend ETFs or consider different passive income ideas to generate a retirement income.

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In fact, I have tried all of the investment services for dividend investors like a crash test dummy of investment services. Just ask me, and you'll learn why there was nothing I could use out there and build the Dividend Snapshot Screeners.

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DISCLOSURE: Please note that I may have a position in one or many of the holdings listed. For a complete list of my holdings, please see my Dividend Portfolio.

DISCLAIMER: Please note that this blog post represents my opinion and not an advice/recommendation. I am not a financial adviser, I am not qualified to give financial advice. Before you buy any stocks/funds consult with a qualified financial planner. Make your investment decisions at your own risk – see my full disclaimer for more details.