A common misconception among new investors is that only high-growth stocks can deliver significant returns. This misconception overlooks the great potential of quality dividend stocks as they can also provide eye-popping returns over time through capital appreciation and the compounding effect of reinvested dividends.
If you’re looking for dividend stocks that can double your money in a short period of time, you may want to look beyond their current dividend yield and consider other factors, like the financial growth trends, the dividend-growth rate, and the fundamental outlook. In this article, I’ll highlight two top Canadian dividend stocks that can not only double your investment in under five years but also provide steady passive income.
Crescent Point Energy stock
Crescent Point Energy (TSX:CPG) is a Calgary-headquartered oil and gas producer with a market cap of $5.6 billion, as its stock currently trades at $8.94 per share. While some factors, including volatile commodity prices, have driven its share prices down by nearly 8% in the last year, CPG stock has still yielded an outstanding 129% positive returns in the last five years — more than doubling in value. At the current market price, the stock offers a decent 4.6% annualized dividend yield and distributes its dividend payouts every quarter.
In the third quarter of 2023, Crescent Point generated $322 million in excess cash flow. The company achieved significant production milestones in the Alberta Montney and Kaybob Duvernay regions and reduced its net debt to roughly $2.2 billion. Its strong cash flows in the first three quarters of the year allowed Crescent to return around $480 million to shareholders through dividends and share repurchases.
Despite disposing of its North Dakota assets, Crescent Point maintains its preliminary 2024 guidance, expecting to generate nearly $1.0 billion in excess cash flow during the year. This reflects the company’s continued focus on portfolio optimization and operational efficiency, which could help its share prices continue soaring.
Canadian Natural Resources stock
Canadian Natural Resources (TSX:CNQ) could be another fundamentally solid Canadian dividend stock that has the potential to yield outstanding returns in the next five years. This energy giant currently has a market cap of $94.4 billion and six stock trades at $87.11 per share after advancing by 7.7% in the last year. Despite the broader market being volatile of late, CNQ stock has remained largely stable, yielding nearly 149% positive returns in the last five years. It also has a 4.7% annualized dividend yield at this market price.
In the September 2023 quarter, Canadian Natural achieved record production levels for both liquids and natural gas, which helped it deliver an adjusted quarterly profit of $2.9 billion, exceeding Street’s estimates. The company’s operations resulted in a strong financial performance, with an adjusted funds flow of $4.7 billion.
These third-quarter results encouraged its management to announce an 11% year-over-year increase in its base quarterly dividends, marking the 24th consecutive year of dividend growth. Given its well-diversified business model, large asset base, and strong cash flows, I wouldn’t be surprised if CNQ stock rallies sharply or even more than double in value in the next five years as well.
