3 Diversified Dividend Stock Picks for Long-Term Investors

Royal Bank of Canada (TSX:RY)(NYSE:RY), Telus Corporation (TSX:T)(NYSE:TU), and Cineplex Inc. (TSX:CGX) represent three of the best long-term, dividend-paying investment options in the market today. 

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

One well-known fact about investing is that dividend-paying stocks far outperform non-dividend-paying stocks over the long-term. This means that every long-term investor should own at least one dividend-paying stock, and depending on your age, maybe a diversified portfolio full of them.

However, you should not simply pick random stocks with questionably high yields and think they will lead you into early retirement. Instead, you want to invest in the highest quality companies with large and safe yields, that also have reputations for raising their dividends. Let’s take a look at three stocks that fit these criteria perfectly.

1. Royal Bank of Canada

Royal Bank of Canada  (TSX: RY)(NYSE: RY) is Canada’s second largest bank by total assets and its stock currently pays a quarterly dividend of $0.75, or $3.00 annually, giving it a healthy yield of about 3.8%. The company is strongly dedicated to increasing this dividend, shown by its seven increases in the last four years, equating to a 42% increase since 2010. Here is a chart of the total dividends paid per share annually since fiscal 2010 and the confirmed payment in fiscal 2014.

Year 2010 2011 2012 2013 2014
Dividends Paid Per Share $2.00 $2.08 $2.28 $2.53 $2.84

2. Telus Corporation

Telus Corporation (TSX: T)(NYSE: TU) is one of the “Big 3” telecommunications companies in Canada and its stock currently pays a quarterly dividend of $0.38, or $1.52 annually, giving it a yield of 3.9% at today’s levels. Like Royal Bank of Canada, Telus has shown a strong dedication to increasing its dividend; in fact, in May 2011, the company stated that it planned to increase its dividend by 10% or more annually through 2016. Telus has delivered on this promise so far by increasing its dividend by 52% since fiscal 2010. Here’s a chart of the total dividends paid per share annually since fiscal 2010 and the projected payment in fiscal 2014.

Year 2010 2011 2012 2013 2014 (estimate)
Dividends Paid Per Share $1.00 $1.1025 $1.22 $1.36 $1.52

3. Cineplex Inc. 

Cineplex (TSX:CGX) is Canada’s largest owner and operator of movie theatres and it currently pays a monthly dividend of $0.125, or $1.50 annually, giving it a yield of about 3.65% at current levels. Like the other two companies we have discussed, Cineplex has also shown a dedication to maximizing shareholder returns by raising its dividend each of the last four years by an average of over 4%. Here is a chart of the total dividends paid per share annually since fiscal 2010 and the projected payment in fiscal 2014:

Year 2010 2011 2012 2013 2014 (estimate)
Dividends Paid Per Share $1.26 $1.28 $1.33 $1.41 $1.48

Should you invest in one of these dividend dynamos today?

Royal Bank of Canada, Telus, and Cineplex all have very large and safe dividends, and their stocks trade at inexpensive valuations based on forward earnings estimates, making for three great investment opportunities. To all of you long-term investors, take a closer look at your portfolios and consider buying one of these stocks to add yield and further diversify your holdings.

Just Released! 5 Stocks Under $50 (FREE REPORT)

Motley Fool Canada's market-beating team has just released a brand-new FREE report revealing 5 "dirt cheap" stocks that you can buy today for under $50 a share.

Our team thinks these 5 stocks are critically undervalued, but more importantly, could potentially make Canadian investors who act quickly a fortune.

Don't miss out! Simply click the link below to grab your free copy and discover all 5 of these stocks now.

Claim your FREE 5-stock report now!

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Joseph Solitro has no position in any stocks mentioned.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Dividend Stocks

TFSA (Tax-Free Savings Account) on wooden blocks and Canadian one hundred dollar bills.
Dividend Stocks

Here’s Exactly How a $20,000 TFSA Could Potentially Grow to $200,000

Index funds like the iShares S&P/TSX Capped Composite Index (TSX:XIC) are tax free in a TFSA.

Read more »

Dividend Stocks

How I’d Invest $6,000 in Canadian Real Estate Stocks to Build Lasting Wealth

Canadian REITs on sale! See how grocery-anchored retail properties offering 9% yields could turn $6,000 into lasting wealth despite US…

Read more »

rain rolls off a protective umbrella in a rainstorm
Dividend Stocks

Economic Headwinds: Should You Still Consider Buying the Dip?

A market dip might seem like a bumpy road, but it can be far smoother in the future with the…

Read more »

e-commerce shopping getting a package
Dividend Stocks

Consumer Spending Plays Amidst the Current Market Dip

Consumption may go down in market dips, but certain consumer stocks are certainly better off than others.

Read more »

Asset Management
Dividend Stocks

12% Dividend Yield! I’m Buying This TSX Stock and Holding for Decades

Stocks with high-dividend yields carry risks. But they could be a good long-term investment. Here is a 12% dividend stock…

Read more »

Canadian flag
Dividend Stocks

How I’d Build a Foundation of Canadian Value Stocks in My Investment Strategy

Canadian investors can explore iShares Canadian Value Index ETF for value stock ideas to build a foundation for their diversified…

Read more »

Canadian dollars are printed
Dividend Stocks

How I’d Transform a $30,000 TFSA Into a Cash-Flow Machine

Here's why TFSA investors should consider owning dividend stocks such as Mullen Group in 2025.

Read more »

A woman shops in a grocery store while pushing a stroller with a child
Dividend Stocks

Dip Buyers Could Win Big in Today’s Market Dip

If you want to buy the dip, think long-term. Which is why this TSX stock is a top option.

Read more »