Canadian stocks have been on a tear of late, driven by easing inflationary pressures, soaring metals prices, and the Bank of Canada’s recent move to slash interest rates for the first time in over four years. Despite having risen sharply so far in 2024, many fundamentally strong Canadian dividend stocks still have the potential to deliver solid returns to investors in the long run.
In this article, I’ll highlight two top dividend stocks that I think would be worth buying on a potential dip, as they not only offer stable dividends with robust cash flows but also have strong growth prospects. Let’s take a closer look at each of them.
Suncor Energy stock
Suncor Energy (TSX:SU) is the first stock I’d consider buying if its share prices witness a downward correction in the near future after rallying by around 38% in the last year. The Calgary-headquartered oil and gas company currently has a market cap of $68.3 billion as its stock trades at $53.23 per share. At this market price, Suncor offers a 4.1% annualized dividend yield, which could look even more attractive if its share prices decline from current levels.
The Canadian energy giant has a strong track record of profitability and cash flow generation, which highlights its ability to maintain and grow its dividend payouts. In the first quarter of 2024, Suncor achieved record upstream production of 835,000 barrels per day (bbls/d), with a notable 785,000 bbls/d from its oil sands operations. The company’s refining segment also set a new benchmark with a throughput of 455,000 bbls/d and an impressive utilization rate of 98%.
Suncor’s strategic focus on achieving high-efficiency levels, expanding market reach, and investments in improving asset performance brighten its long-term growth outlook, making it an attractive dividend stock to buy on a dip in the near term.
Manulife Financial stock
Manulife Financial (TSX:MFC) stock has jumped by over 40% in the last year, taking its share prices to $35.84 per share and fueling its market cap to $64.1 billion. At this market price, MFC stock has a 4.5% annualized dividend yield. If you don’t know it already, Manulife is a global financial services provider offering various services, including insurance, wealth management, and retirement solutions to its customers.
In 2023, Manulife’s revenue more than doubled on a year-over-year basis, while its adjusted quarterly earnings also increased by nearly 12% from a year ago to $3.47 per share. Besides its strong financial growth trends, the recent rally in Manulife stock could also be attributed to expectations of improved demand for its financial services as interest rates continue to fall gradually in the coming years.
Interestingly, this Toronto-based financial services company raised its dividend per share by around 60% in the five years between 2018 and 2023. As economic growth continues to improve, creating more demand for its services, I expect Manulife to continue its dividend-growth streak in the coming years as well. Given these positive factors, buying MFC stock on a dip could be a smart decision, which may lead to a higher return on investment for shareholders.
