Dividend paying stocks typically outperform other investment instruments as they offer two sources of return, capital appreciation and a regular source of income. As they are characterized with less volatility, dividend stocks are a preferred choice of those nearing retirement as well as investors with a low-risk profile. Yield varies by industry, but profitable sectors to look into are banking, insurance, telecom, and energy.
Major Canadian banks such as CIBC, Bank of Montreal, and RBC have an average yield of 3.3 percent. According to a recent Reuters report, the Big Six are expected to boost their dividends in 2022. The yield increases would range from 34 percent for the National Bank of Canada to 10 percent for the Bank of Nova Scotia. Currently, Scotiabank has the highest yield (4.27 percent), followed by CIBC (3.8 percent), and BMO (3.5 percent).
The energy sector offers high returns in 2022, especially companies with strong cash flows, good balance sheets, and dividends with a solid payout history. Top-performers and big-industry players with high dividend yields this year are TC Energy, Enbridge, and Pembina Pipeline. TC Energy operates a vast network of natural gas lines supplying LNG export terminals, industrial facilities, power generation plants, local distribution companies, and interconnecting pipelines. TC’s yield currently stands at 5.40 percent while their 5-year yield sits at 4.82 percent.
Canada’s largest energy business, Enbridge operates across sectors such as renewable power generation, gas storage and distribution, gas midstream and transmission, energy services, and liquids pipelines. Their annual dividend yield is currently at 6.30 percent, which makes Enbridge the undisputed leader here.
Pembina Pipeline mainly specializes in marketing and new ventures, facilities, and pipelines. The company operates an extensive storage and transportation infrastructure for the delivery of hydrocarbon liquids, natural gas liquids, condensate, and heavy oil, oil sands, and conventional natural gas. With an annual dividend yield at 6.24 percent, Pembina Pipeline closely follows Enbridge, offering a 5-yield yield of 5.74 percent. Not only this but investing in Pembina’s shares offers the chance to cover almost the entire spectrum of the gas and midstream oil sector.
Operating in a low-interest climate over the past few years, Canada’s insurance businesses have been interesting to keep an eye on. Some stocks benefited from the gradual economy reopening and market growth while others did not. Overall, as most companies hold relatively low levels of debt, their dividend paying stocks can be considered a relatively safe investment. Insurance businesses to watch for in 2022 include Great West Life, Manulife, Industrial Alliance, and Power Corporation.
Manulife Financial is a major financial services company operating in Canada, the U.S., and across Asia. The company offers a comprehensive suite of asset and wealth management solutions, insurance products, and advice to institutions, businesses, and individuals. Currently, their dividend yield sits at 5.29 percent, with an average payout of $1.04.
A financial services company headquartered in Winnipeg, Manitoba, Great West Life offers investment and retirement services, health and life insurance, and reinsurance and asset management. Their insurance business covers the whole spectrum of products, including health and dental, disability, and creditor coverage and workplace benefits. With $2 trillion in consolidated assets, their dividend yield is currently at 4.95 percent.
Also a major wealth management and insurance company, Industrial Alliance manages over 4 million client accounts and over $221 billion in assets. The main segments the company operates across include group savings and retirement, group insurance, individual asset management, and individual insurance. Although not as lucrative as Manulife or Great West Life, their dividend yield sits at 3.38 percent.
The last pick on the list, Power Corporation is a global management and holding company engaging in renewable energy, asset management, and financial services businesses. Serving customers in Asia, Europe, and North America, Power Corporation manages more than 30 million client accounts, operating through subsidiaries such as China Asset Management, Power Energy, and Power Financial. Being one of the strongest international financial services brands, their dividend yield currently stands at 5.08 percent.
While the Canadian telecom sector wasn’t as hard hit by the prolonged pandemic, some stocks have struggled to gain momentum. Already into 2022, the sector shows signs of recovery and growth, paying out investors decent dividends. Here the main players to keep a close eye on in 2022 are Bell Canada, Telus, Quebecor, and Rogers Communications.
The largest telecommunications and media company in Quebec, Quebecor operates across three segments: television and film production, magazines, and television channels. Engaging in advertising, distribution, music recording, book publishing, and news media, Quebecor boasts revenue of $4.32 billion and a dividend yield at 3.82 percent as of March, 2022.
With a forward yield of 3.92 percent, Telus offers some of the best paying stocks on the Toronto Stock Exchange. Specializing in a range of telecommunication services, Telus operates across multiple segments, including IPTV television, healthcare, voice, entertainment, and internet access.
Rogers Communications is a relatively small player compared to Telus and Bell Canada but their reported revenue stands at $3.92 billion. Rogers also operates a large media segment, with significant telecommunications, internet, cable television, and wireless communications assets. With 11.3 million wireless subscribers, the Shaw acquisition underway, and considerable capital appreciation, Rogers’ assets can be considered a low-risk investment, despite a somehow lower dividend yield at 2.93 percent.
Lastly, Bell Canada, one of the biggest players in the telecommunications space, has a dividend yield of 5.03 percent. The company holds a diversified portfolio of telecom services, including television, wireless, voicemail, voice, and Internet, which makes it a good investment option for capital preservation.
I invested in RBC 10 years ago and I don’t regret it 🙂
Right now the stock markets are going down, so maybe selling some of your RBC position makes sense in order to protect your profits. RBC still pays dividend but their dividend nowadays cannot even compensate you for the rampant inflation.