2 Dividend-Growth Stocks Every Millennial Should Consider for Their TFSA

Two dividend-growth stocks every Canadian millennial should consider for their TFSA accounts include Magna International Inc. (TSX:MG)(NYSE:MGA), which increased its dividend payout by more than 10% earlier in 2019.

| 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

The investment profession continues to involve with each passing year, as does almost any other industry, for that matter.

However, in addition to the undeniable success that we’ve seen in recent years on the part of robo-advisors, ETF passive investing, and other fin-tech disruptions, one of the major breakthroughs among financial industry professionals in recent years has been the merits of a dividend-growth investing strategy — in particular, for younger investors with longer investment time horizons.

Historically, investors have tended to get grouped into either the “value” or “growth” style categories; however, recently, more and more research is suggesting that the optimal strategy for investors with multi-decade investment horizons is an approach that carefully balances the strengths of both stylistic disciplines.

For example, value investing has tended to focus on companies whose shares pay out to their investors high dividend yields, while growth investing has largely been hell-bent on a “growth-at-all-costs” mentality at the expense of virtually all meaningful financial metrics (particularly so over the past decade or so).

Yet evidence is emerging that supports the merits of investing in the shares of high-quality, defensible (note, that doesn’t necessarily mean “defensive”) companies that, while they pay a dividend, have the capacity available to meaningfully grow their dividends — sustainably — over time.

Two Canadian companies that fit this bill neatly are Magna International (TSX:MG)(NYSE:MGA) and Molson Coors Canada (TSX:TPX.B)(NYSE:TAP).

Magna is a leading North American auto parts manufacturer and supplier while Molson is one of the world’s largest alcoholic beverage manufacturers and distributors.

Magna stock currently pays its shareholders a 2.88% annual dividend yield, and while that’s actually slightly less than the TSX Index average of 3.12% as at the end of June, what’s more significant is that Magna increased that dividend by 10.6% in March of earlier this year.

But thanks to some disciplined capital management on the part of the company’s senior officers, MG stocks current payout ratio sits well below the 50% threshold, indicating that it still has ample runway left ahead of it in order to accommodate future dividend hikes.

Molson, meanwhile, is another company that is offering investors plenty of reason to believe in the prospects of significant and meaningful dividend increases for (hopefully) years to come.

Actually, Molson had suspended its policy of regular dividend increases a few years ago following the company’s acquisition of the MillerCoors joint venture and Global Miller brand portfolio back in 2015 for $12 billion.

Rather than dedicating its available funds to increasing its dividend payout, management and the board of directors made the decision to maintain the current payout but use its available excess cash to pay down its outstanding financial obligations.

A few years removed, and with debts now in what management views to be reasonable levels, in August TPX’s board of directors announced a major 35% increase to the current payout — a sure sign that this company means business as far as its shareholders’ long-term interests are concerned.

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

Before you buy stock in Amazon, 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 Amazon 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 Jason Phillips owns shares of Molson Coors Brewing. The Motley Fool owns shares of Molson Coors Brewing. Magna is a recommendation of Stock Advisor Canada.

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

Dividend Stocks

3 Canadian REIT Stocks to Buy and Hold for the Next Quarter-Century

These three Canadian REITs trade cheaply and are highly reliable, making them some of the best stocks you can buy…

Read more »

A train passes Morant's curve in Banff National Park in the Canadian Rockies.
Dividend Stocks

1 Practically Perfect Canadian Stock Down 24% to Buy Now and Hold for Life!

CNR stock is a top Canadian stock for investors, especially with shares down on the TSX today.

Read more »

Canada national flag waving in wind on clear day
Dividend Stocks

The Best Canadian Stocks to Buy Right Away With $30,000

If you have $30,000 you're willing to invest, these are some of the first Canadian stocks to consider on your…

Read more »

rail train
Dividend Stocks

What to Know About Canadian Pacific Railway Stock for 2025

CP stock has now gone through a major merger, so what do investors have to look forward to?

Read more »

ways to boost income
Dividend Stocks

Top Canadian Value Stocks I’d Buy for Dividend Growth and Appreciation

If you are looking for income and capital appreciation, here are three Canadian value stocks for a great total return…

Read more »

coins jump into piggy bank
Dividend Stocks

The Smartest Canadian Stock to Buy With $2,000 Right Now

The company’s powerful combination of growth, income, and value, positions it well to deliver solid returns, making it a smart…

Read more »

Transparent umbrella under heavy rain against water drops splash background. Rainy weather concept.
Dividend Stocks

This 10.6 Percent Dividend Stock Pays Cash Every Single Month

Are you looking to invest for a rainy day? This 10.6% dividend stock pays cash every month, irrespective of the…

Read more »

A worker gives a business presentation.
Dividend Stocks

Market Dip: Opportunity or Risk This April?

This market dip might have investors worried, but should they be excited instead?

Read more »