3 Top Canadian Dividend Stocks to Buy While They’re Still Cheap

Looking for cheap Canadian dividend stocks to help supplement your income? Here are three high-quality stocks you can buy at a bargain today!

| More on:

The Canadian stock markets could be due for a shake-up as we head into the fall. There are a lot of factors (health, politics, geopolitics, economics) that could shake up markets. That is why it is not a bad idea to get defensive in some high-quality Canadian dividend stocks. Here are three stocks that are attractive and cheap.

A top Canadian dividend-growth stock

Algonquin Power (TSX:AQN)(NYSE:AQN) is a great stock for defence and offence with a unique portfolio of regulated utilities and renewable power assets. That combination provides stable, predictable cash flows if the market turns down, and upside from long secular tailwinds driving renewable power growth.

Algonquin has been investing heavily to expand its operational capacity and increase its rate base. It has a $9.4 billion capital plan in the works. Through this, it expects to generate 8-10% annual earnings per share growth over the next four to five years. It has already deployed $3.1 billion of that capital.

These returns do not include any mergers or acquisitions (although, there have been rumours about a potentially large one) or its greenfield renewable power development pipeline. In addition, it pays a great 4.3% dividend that it has consistently grown for years. This Canadian stock is down over 5% this year and looks attractive for a long-term position.

A top real estate play on Europe

Real estate is a really attractive asset class right now. With interest rates low and higher-than-average inflation, real estate businesses are able to earn very high, growing cash flow spreads. One Canadian stock that is not that well-known is European Residential REIT (TSX:ERE.UN). Frankly, there is nothing truly Canadian about this stock.

It owns over 6,000 multi-family rental units in the Netherlands and a few commercial office properties sprinkled across Western Europe. The Netherlands is a great place to own apartments. The country has a very dense population, strong immigration trends, and a very limited new housing supply.

This REIT has high 98% occupancy and is seeing mid-teens rent growth on new leases. Its debt is around 1.6%, so it captures market-leading debt-adjusted cash flow yields. Despite this, this Canadian stock is one of the only residential REITs that’s trading below its net asset value. It pays a 3.5% dividend and it looks like great value today.

A top Canadian bank stock

For dividends, Canadian banks stocks are well-known around the world. While I wouldn’t call Toronto-Dominion Bank (TSX:TD)(NYSE:TD) a cheap stock, it is down 2% since it released earnings on Thursday. The company beat earnings expectations, earning $1.92 per share in the quarter.

However, the stock saw is seeing some weakness. Quarter-over-quarter revenues were down less than 1%. Some of that was due to loan growth stagnating in the U.S. because of large stimulus measures. The banks believe loan growth should return to normal as fiscal stimulus declines.

So, if it is just the dividend you want, you can’t go too far wrong with owning TD. It pays a good, well-covered 3.7% dividend. Once Canadian banking regulators allow, this stock will likely see a dividend increase.

Overall, TD is a very strong Canadian institution. It is Canada’s largest retail bank and one of the largest in the U.S. It has a strong balance sheet and excess capital to deploy into acquisitions or share buybacks. For safe, solid dividends, this is not a bad Canadian stock to buy on the recent stock pullback.

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 Robin Brown owns shares of Algonquin Power & Utilities Corp. and European Residential REIT. The Motley Fool has no position in any of the stocks mentioned.

More on Dividend Stocks

Canadian Dollars bills
Dividend Stocks

3 Monthly-Paying Dividend Stocks to Boost Your Passive Income

Given their healthy cash flows and high yields, these three monthly-paying dividend stocks could boost your passive income.

Read more »

Make a choice, path to success, sign
Dividend Stocks

The TFSA Blueprint to Generate $3,695.48 in Yearly Passive Income

The blueprint to generate yearly passive income in a TFSA is to maximize the contribution limits.

Read more »

hand stacks coins
Dividend Stocks

3 Ultra-High-Yield Dividend Stocks You Can Buy and Hold for a Decade

These three high-yield dividend stocks still have some work to do, but each are in steady areas that are only…

Read more »

senior man and woman stretch their legs on yoga mats outside
Dividend Stocks

TFSA: 2 Canadian Stocks to Buy and Hold Forever

Here are 2 TFSA-worthy Canadian stocks. Which one is a good buy for your TFSA today?

Read more »

calculate and analyze stock
Dividend Stocks

This 5.5% Dividend Stock Pays Cash Every Single Month!

This REIT may offer monthly dividends, but don't forget about the potential returns in the growth industry its involved with.

Read more »

Silver coins fall into a piggy bank.
Dividend Stocks

How to Use Your TFSA to Earn up to $6,000 Per Year in Tax-Free Passive Income

A high return doesn't mean you have to make a high investment -- or a risky one -- especially with…

Read more »

path road success business
Dividend Stocks

2 High-Yield Dividend Stocks to Buy Hand Over Fist and 1 to Avoid

High yields are great and all, but only if returns come with them. And while two of these might, another…

Read more »

Man holds Canadian dollars in differing amounts
Dividend Stocks

This 7% Dividend Stock Pays Cash Every Month

A high dividend yield isn't everything. But when it pays out each month and offers this stability, it's worth considering!

Read more »