Despite the fact that interest rates have already begun to decline rapidly and inflation is now much more under control, many top Canadian dividend stocks continue to trade off their highs, making them some of the best stocks to buy now as we head into January.
As interest rates fall, typically, so do the dividend yields of stocks, sending the prices of these investments higher.
However, because there is still significant uncertainty in markets, many of the best dividend stocks in Canada are still trading at attractive valuations, making now the time for investors to put their hard-earned money to work.
Furthermore, because many of the best dividend stocks consistently earn a profit and return capital to investors, these investments are far more reliable than their non-dividend-paying peers.
So, if you’re looking to buy some of the most reliable dividend stocks on the TSX this January, here are two top choices to consider.
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An impressive retail REIT on the Canadian dividend aristocrats list
If you’re looking for top dividend stocks to buy for your portfolio, high-quality real estate stocks are always an excellent choice. Typically, though, retail REITs aren’t as defensive as residential REITs. However, CT REIT (TSX:CRT.UN) is one of the best passive income generators on the TSX.
The main reason why CT REIT is so reliable is that its majority owner and largest tenant is Canadian Tire, a massive and well-known retailer across the country.
In fact, CT REIT generates roughly 90% of its revenue from Canadian Tire, meaning unless something drastic happens to one of the best-known brands in Canada, a stock that’s also consistently profitable, CT REIT should continue to generate a profit.
This resiliency has been especially important in recent years when it’s been on full display. Not only did CT REIT fare much better than many of its retail REIT peers through the pandemic, but it also continued to grow both its sales and earnings as both inflation and interest rates were increasing substantially.
Furthermore, while CT REIT’s resiliency is due in large part to its relationship with Canadian Tire, it also has numerous growth projects in the works, which will not only help the price of the REIT to increase it will also help CT REIT generate more passive income for investors.
Therefore, when you consider that CT REIT has never had a single year in which its revenue didn’t grow and the fact that it increases its distribution annually, it’s certainly one of the top dividend stocks to buy now, especially as it trades off its highs.
Not only can you buy the stock at a discount today, but you can also lock in a higher yield. For example, right now, CT REIT’s yield is sitting at 6.4%, which is considerably higher than its five-year average forward yield of 5.6%. Not to mention, in just the last five years, that distribution has increased by more than 16%.
So, if you’re a passive income seeker looking to buy a top dividend stock for your portfolio as we head into the new year, CT REIT is undoubtedly one of the best there is.
One of the top dividend stocks on the TSX to buy right now
In addition to CT REIT, another top dividend stock to buy now is Pizza Pizza Royalty (TSX:PZA).
Just like CT REIT, Pizza Pizza is also trading off its highs, making now the ideal time to add the stock to your portfolio.
Pizza Pizza has been out of favour as investors have worried how an uncertain economic environment could impact its sales. However, Pizza Pizza has always been a reliable stock with sticky revenue. Furthermore, according to analysts, the worst appears to be behind Pizza Pizza.
While sales were expected to decline in 2024, albeit by just 1%, they’re already expected to recover in 2025.
Therefore, while the royalty stock trades nearly 15% off its 52-week high, it’s certainly worth considering adding to your portfolio. At this price, Pizza Pizza’s yield has climbed to more than 7.1%, considerably higher than its five-year average yield of 6.7%.
So, if you’re looking for some of the best dividend stocks to buy now, Pizza Pizza is certainly a top choice.
