The Best Canadian Dividend Stocks to Buy During a Market Downturn

Enbridge stock is among the best dividend stocks to own today as we try to best navigate this market downturn.

| More on:
a person watches a downward arrow crash through the floor

Source: Getty Images

In a market downturn, dividend stocks can potentially shelter your portfolio as well as provide you with dividend income. But it’s crucial to own the right stocks to ensure preservation of capital and maximize dividend income. Ideally, we should find the best Canadian dividend stocks that are the most resilient and immune to a market downturn.

In this article, I will explore three Canadian dividend stocks to buy today.

Fortis: Yielding 4.26%

I have talked a lot about Fortis Inc. (TSX:FTS) in the last few years. This is because Fortis is one of the best Canadian dividend stocks to buy in a market downturn, which was looking increasingly likely.

And today, this is where we’re at – a market downturn. Thankfully, however, it’s not too late to buy Fortis stock. In fact, as you can see from Fortis’ stock price graph below, it’s trading 15% lower than its 2022 highs. It’s also yielding a generous 4.26%.

But why is Fortis stock one of the best Canadian dividend stocks to buy during this downturn? Well, it’s quite simple. Fortis is a utility company. As such, 99% of the company’s assets are regulated. This means steady, reliable revenue streams. Also, Fortis supplies power, which is essential regardless of the economic environment.  So inelastic demand mixed with regulated, stable revenue translates into a resilient dividend stock to buy today.

Enbridge stock is yielding 8%

As one of Canada’s leading energy infrastructure companies, Enbridge Inc. (TSX:ENB) has sure had an interesting few years. But at the end of the day, the bottom line is that Enbridge stock has a long history of generating stable, growing cash flows and dividends.

In fact, Enbridge has 28 years of annual dividend increases under its belt. During this time period, its annual dividend has grown at a compound annual growth rate (CAGR) of 7.25%, to the current $3.55 per share. Essentially, the dividend today is 1,320% higher than it was in 1995. Also, Enbridge’s stock price is 282% higher than 20 years ago.

In addition to this, Enbridge has a diversified cash flow profile that’s pretty safe and secure. In fact, 98% of the company’s EBITDA is underpinned by long-term contracts or “take or pay” contracts (with the added feature of inflation protection and cost sharing provisions).

Also, Enbridge stock’s dividend yield is a whopping 8% and Enbridge’s stock price is significantly undervalued (trading at a mere 15 times this year’s earnings). All of this makes it one of the best Canadian dividend stocks to buy now.

BCE: Yielding 7.4%

Finally, BCE Inc. (TSX:BCE) is Canada’s largest telecom services company. BCE stock is another one of the best dividend stocks to buy in a market downturn for a few simple reasons. Firstly, it has been one of the most reliable TSX stocks for decades. Also, its business is defensive, its cash flows are predictable, and today, it’s yielding a very generous 7.4%.

Let’s take a look at BCE stock’s track record for some more colour on how it has performed. Since 2000, BCE’s dividend has grown at a compound annual growth rate (CAGR) of 6.22%. Today, the dividend is 223% higher than in 2000. Also, BCE stock has risen 78% – not bad for a low-risk, steady, and predictable stock.

In a market downturn, BCE’s unmatched network and financial resources will most likely ensure that the company and the stock will come out of it relatively unscathed. Thus, it’s one of the best Canadian dividend stocks to buy now.

The bottom line

We are already in a market downturn. Those of us who own the stocks I’ve discussed in this article are doing quite well – receiving dividend payments while seeing that capital is being preserved quite nicely.

For those of us who don’t own any of these stocks, rest assured. You still have time to buy and gain exposure to one or more of the best Canadian dividend stocks to own today.

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 Karen Thomas has a position in BCE and Enbridge. The Motley Fool recommends Enbridge and Fortis. The Motley Fool has a disclosure policy.

More on Dividend Stocks

Train cars pass over trestle bridge in the mountains
Dividend Stocks

Is CNR Stock a Buy, Sell, or Hold for 2025?

Can CNR stock continue its long-term outperformance into 2025 and beyond? Let's explore whether now is a good time to…

Read more »

coins jump into piggy bank
Dividend Stocks

The Smartest Dividend Stocks to Buy With $500 Right Now

These top dividend stocks both offer attractive yields and trade off their highs, making them two of the best to…

Read more »

Middle aged man drinks coffee
Dividend Stocks

Here’s the Average TFSA Balance at Age 35 in Canada

At age 35, it might not seem like you need to be thinking about your future cash flow. But ideally,…

Read more »

ETF stands for Exchange Traded Fund
Dividend Stocks

How to Invest Your $7,000 TFSA Contribution in 2024

Here's how I would prioritize a $7,000 TFSA contribution for growth and income.

Read more »

a man relaxes with his feet on a pile of books
Dividend Stocks

CPP Pensioners: Watch for These Important Updates

The CPP is an excellent tool for retirees, but be sure to stay on top of important updates like these.

Read more »

Technology
Dividend Stocks

TFSA Investors: 3 Dividend Stocks I’d Buy and Hold Forever

These TSX dividend stocks are likely to help TFSA investors earn steady and growing passive income for decades.

Read more »

four people hold happy emoji masks
Dividend Stocks

Love Dividend Growth? Check Out These 2 Income-Boosting Stocks

National Bank of Canada (TSX:NA) and another Canadian dividend-growth stock are looking like a bargain going into December 2024.

Read more »

An investor uses a tablet
Dividend Stocks

A Dividend Giant I’d Buy Over Enbridge Stock Right Now

Enbridge stock may seem like the best of the best in terms of dividends, but honestly this one is far…

Read more »