Why “Dividend Knights” Are the Best Dividend Stocks to Buy Now

Dividend Kings and Aristocrats sound nice, but what about the Dividend Knights? Here are some strong reasons to consider these dividend stocks.

Amy Legate-Wolfe

Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Before joining Motley Fool Canada, she wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote: “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published February 1, 2024 3:30 pm EST

| More on: BIP.UNCNQMRU

If you’ve been investing for even a little while, it’s likely you’ve already heard about Dividend Aristocrats and Dividend Kings. In Canada, Dividend Aristocrats are companies that have increased their dividends for over five consecutive years. Meanwhile, Dividend Kings have increased them for over 50 years!

Yet there is another category, and it’s one I want to get into now. That’s Dividend Knights. These are dividend stocks that have beaten the market and that can be quite significant over a long period of time. This is why today we’re going to look at three to consider buying now on the TSX today that have beaten it over the last five years.

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Brookfield Infrastructure

First, we’ll look at strong infrastructure stock Brookfield Infrastructure Partners (TSX:BIP.UN). BIP stock has seen shares rise by 37%, beating the TSX with growth of 32% in the last five years.

The infrastructure stock continues to invest in long-term infrastructure projects. These especially are involved in the energy sector but include transport as well as data. If you need it, this company can build it.

Meanwhile, it offers a dividend yield of 4.75% as of writing. This is fairly higher than the 4.2% average the company has offered during the last five years. Meanwhile, shares are down by 9% as of writing, offering a great opportunity to get in on this Dividend Knight.

Canadian National Resources

Another very strong option is to look at Canadian National Resources (TSX:CNQ). CNQ stock has seen shares rise by a whopping 149% over the last five years, surging past the TSX and its 32%.

The company is one of the largest oil and gas producers in western Canada, offering diversification through its offshore and North African locations. Moreover, it continues to expand and has seen strong earnings quarter after quarter during this difficult period.

Yet right now, investors can still pick up the dividend stock with a 4.67% dividend yield while it trades at 13.32 times earnings. Shares are also up just 5% in the last year as of writing, and its dividend is now higher than its five-year average of 4.41%. So, again, this is another strong Dividend Knight to consider.

Metro

Finally, Metro (TSX:MRU) also deserves a spot on this list, with shares climbing a whopping 50% in the last five years compared to the TSX and its 32%. The grocery chain continued to see strong consumer demand even through the pandemic. And that has continued in the years since.

In fact, Metro stock not only reported a profit this week during its earnings report but also increased its dividends! This provided even more growth in shares as shareholders and investors alike believe this is a sign of strength for the stock.

Metro stock has a smaller dividend yield at just 1.7%, but don’t write it off for that! Considering both share growth and dividends, you could be looking at even more stability over the long term. You can pick it up for a steal while it trades at 0.8 times sales and offers a dividend higher than its five-year average of 1.5%.