Buy These 3 Dividend Stocks Today

Sometimes the market offers you a gift. Right now, excellent incomes stocks like BCE Inc. (TSX:BCE)(NYSE:BCE) are trading at low prices with excellent yields.

| 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

If you really come down to it, the opportunities to buy and sell are much rarer than the daily market makes it appear. Looking back over the past few years, I can only think of a few good buying opportunities. In February, the quick market drops provided entry points for American dividend stocks. In January of 2016, there was the opportunity to buy the Canadian banks at attractive levels. In 2012, the European credit struggles had stocks languishing at attractive levels for the much of the year.

There are good buying points, but they always come when everyone is telling you the sky is falling, either in a particular sector or in the market as a whole. The problem is that these buying opportunities come when you are the most afraid to buy. As an investor, you must discern whether the pullback is warranted and if further danger exists, or if the selling has gone too far given an individual company’s fundamentals.

Right now, dividend stocks in Canada have sold off far too much. Everyone is so concerned about interest rates rising that they have failed to consider the possibility that rates will most likely not get a whole lot higher.

Recently, the Bank of Canada asserted that it is determined to bring the prime rate up to a normalized range of 2.5-3.5%. Doing some quick mental math, I can come to the conclusion that at that range, dividend yields, at today’s prices, will more than likely still far exceed the interest on a GIC, bank account, or Government of Canada bond.

But investors certainly need to be aware that choosing the right kinds of dividend stocks is extremely important for long-term results. Companies with steady, growing dividends are generally the best income choices. Since many have seen their share prices become quite compressed, there is a very good chance for capital appreciation as well.

Electrical utility companies, telecommunications, and fossil fuel pipeline companies have been fantastic wealth creators over the years. BCE (TSX:BCE)(NYSE:BCE), Emera (TSX:EMA), and TransCanada (TSX:TRP)(NYSE:TRP) are all fantastic choices with decades of excellent performance and dividend appreciation behind them. The best part is that all of these companies have strong, predictable cash flows that will support further dividend increases into the future.

BCE and TransCanada, for example, just reported their Q3 results on November 1. BCE grew its revenue by 3.2% over the previous year and net earnings by 2%. The growth was powered by record wireless additions, a business which will likely continue to grow as the Internet of Things continues to expand. TransCanada increased its earnings by 43% over the same period the year before. It expects to power dividend growth to the tune of 8-10% per year until at least 2021.

While Emera has not yet reported its earnings (release date is November 8), its past performance should give some indication as to its strength. Emera is a largely regulated utility company with operations in Canada and the United States. The company raised its dividend in the second quarter of 2018 and expects to continue to raise the dividend at a rate of 4-5% until at least 2021.

Buy these companies now

Right now is one of those times when you need to buy. The yields on BCE, TransCanada, and Emera are already phenomenal at 5.53%, 5.29%, and 5.7%. Considering these yields are expected to grow for the next several years at least, this is one of those excellent entry points you do not want to miss.

Of course, stocks have more risk than GICs or government bonds. It is therefore a given that very conservative investors will choose to sell dividend stocks and lock the proceeds into ultra-safe investments. This will almost certainly hold down the prices of dividend stocks in the short term. But in the long term, it is highly likely that these stable, cash-flowing businesses will continue to pay and raise their dividends as well as experience capital growth.

Should you invest $1,000 in Manulife right now?

Before you buy stock in Manulife, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Manulife wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $20,697.16!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*.

See the Top Stocks * Returns as of 3/20/25

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 Kris Knutson owns shares of BCE INC., EMERA INCORPORATED, and TRANSCANADA CORP.

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 »