What exactly is a Canadian dividend stock that’s “superior” in this climate? Of course, there’s more to it than just the upfront yield. As interest rates rise, a lot of higher-yielding names with considerable debt loads are going to be in for a bit of a stress test of sorts. In my view, durable cash flows and a bright, predictable dividend growth runway stand out as superior attributes for passive income investors to look for.
As rates rise and dividend reduction risks start getting real, perhaps the more promising dividend plays aren’t the ones with swollen yields. In this piece, we’ll check in on a quick trio of names that I think might be a great fit for investors looking to balance the income they’ll receive in the near term as well as growth to be had over the long run.
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Enbridge
Shares of Enbridge (TSX: ENB) are on the mend after a brutal late-summer correction. The yield sits at a still-bountiful 5.6% despite recent headlines that have troubled the stock. Of course, the midstream energy names could stay under pressure for some time, and while the growth path forward might be just a bit hazier as we head into 2027, I still think that it’s more about the rich, stable cash flows than any regulatory roadblocks that might stand in the way.
The stock trades at 20.6 times forward price-to-earnings (P/E), which is very reasonable for one of the TSX Index’s most generous dividend giants. While shares of the $153 billion behemoth aren’t a smooth ride higher anymore, I do view the name as an attractively valued dividend grower for investors willing to embrace volatility.
Canadian Natural Resources
Canadian Natural Resources (TSX: CNQ) took a huge backward step on Monday, sliding more than 4% in what was a rather rough day for energy. For investors who’ve been enjoying gains, steady dividends, and dividend growth, I’d view any such pullback as more of an opportunity to top up than trade out.
Shares of CNQ look quite cheap at 16.2 times forward P/E. The 3.2% dividend yield isn’t as towering as it used to be, but with production surging and cash flows swelling, I’d be more than willing to label the name as one of the more “superior” dividend payers to keep on the radar as the TSX Index wobbles in the final few months of the year.
Telus
Telus (TSX: T) is a name that income investors may have already written off. The only thing more painful than the dividend cut was the steep capital losses along the way. It’s been hard to catch the falling knife, but shares have been quite productive in the past month, gaining more than 11% over the period.
It’s hard to tell if this is a bottom or just another short-lived rally that’ll trap the bulls. Personally, I think the freshly cut, but more sustainable, 5.9%-yielding dividend is worth getting behind, even if it means having to brave another treacherous year or two as the telecom stocks do their best to stabilize.
In my view, the $20 billion telecom titan lost many fans on the way down, but it’s those who stand by the name in its trying times who will stand to do best as the tides turn and the telecoms have another day in the sun.
