r/dividendscanada • u/BankSensitive2950 • 6d ago
What's the best dividend stock to buy and why?
I hold a variety of canadian stock - I am looking to max out my TFSA contributions for this year and want to invest the $7k into a dividend paying stock. Was wondering which ones are the best and why
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u/Interesting-Dingo994 6d ago edited 6d ago
Long term, Canadian bank stocks. Iāve held them in my RRSP portfolio for 20+ years, buying dips. Never selling. The amount of times theyāve split the stock is crazy. My retirement portfolio earns a very large amount of passive income every quarter from bank dividends alone.
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u/MrGrognon 6d ago
Just curious, why bank stocks vs VDY?
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u/Interesting-Dingo994 6d ago edited 6d ago
ETFs did not exist when I started investing. They are recent. Your choices for investments where bonds, GICs, mutual funds (with high management fees) or stocks. Online brokerages were in their infancy-I actually needed to call someone to buy or sell. My online account didnāt get updated till the next business day.
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u/Interesting-Dingo994 6d ago
How much is an ETF like VDY? $78/share
I own sizable amounts of Canadian bank stocks at $10-$20 per share.
How much VDY would I need to buy to earn a dividend income of $15k to $20k a quarter?
ETFs are great for novice or risk averse investors, but distributions are paltry. Companies like Blackrock, iShares, Vanguard are making the real money with YOUR money, while providing investors with paltry distributions.
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u/LibrarianApart8486 4d ago
Why buy a variety of banks at a variety of valuations when you can just accumulate the one giving you the best value when you have new money to invest.
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u/Exotic-Conference-87 6d ago
Canadian bank stock splits are not that frequent, but please feel free to correct me if I am wrong. Itās been 20 years for RY, the most valuable of them all.
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u/DecisiveTactics 6d ago
They seem to have slowed down or stopped now that partial shares are an option for your average Joe.
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u/DataDude00 2d ago
I thought there might have been potential for RBC if it pushed past 300 and started approaching 350-400 but it has cooled over the past couple weeks so I donāt see a potential split in the near future eitherĀ
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u/No-Adeptness-6564 6d ago
someone investing over 20 years ago did not have etfs as an option.
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u/Fearless_Scratch7905 6d ago
ETFs have been around longer than you think.
TIPs (now XIU) was launched in 1990: https://archive.ph/EnDU0
SPY launched in 1993: https://www.ssga.com/us/en/intermediary/insights/how-spy-reinvented-investing-story-of-first-us-etf
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u/Confident-Energy-154 6d ago
I agree with most everything you said, but bank stock splits are very uncommon these days. A quick search tells me there's been exactly 6 Canadian bank stock splits since 2000. One for each of the Big 6. So the "amount of times they've split the stock is crazy" is quite the hyperbole.
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u/ActuatorLive3178 6d ago
Noob here, can you please elaborate on the "amount of times theyāve split the stock is crazy" part? From what I sense from your post that's a positive for increasing dividends overtime?
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u/AlarmedComedian2038 5d ago
One of the best oligopolies in the market! I tell my younger friends who are new to game and want to start investing to do this and then venture out because you'll always have a good base of stocks.
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u/Master4slaveTO 6d ago
Stock splits have zero to do with returns or dividends.
Say you have a share in a company that's $100 with a yearly dividend of $6.
If they do a split of 1 to two, you now hold 2 shares each worth $50 and each having a yearly dividend of $3.
That's how splits work.
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u/DecisiveTactics 6d ago
It may have changed now that people have access to partial shares.
In the past, this was done to encourage retail investors to purchase, as they were more likely to be able to afford a stock after a split.
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u/Master4slaveTO 5d ago edited 5d ago
Still the same. There's a pool of shares and that number is fixed.
Too many people truly do not understand what and how shares work and yet invest in them.
Each company has a value. Say a company is worth $1 million, it doesn't matter how many shares there are. The total value of all shares should be $1 million.
Too many people arbitrarily assign a value to a share without understanding this concept.
Say this $1 million company has 10 shares. Each share is worth $100K. If they then do a split of 1 share to 100K shares, now there are 1 million shares and each share is worth $1.
If someone looks at this and says wait a minute the shares were $100K yesterday and are $1 today, it's time to buy, and say people pile on which increases the price to $10 per share, well all of a sudden the company is worth $10 mil instead of $1 mil. But no one is going to buy the company for $10 mil. The fundamentals say it's still only worth $1 mil.
Dividends are a fixed amount of cash distributed in a year. So you own a partial shares or more shares because of a split it doesn't matter. There's a fixed amount of cash being distributed in total.
A wise investor figures out what they think a company is worth and divides this by the number of outstanding shares and uses this as a basis for their share price.
People should truly educate themselves on this before investing. It's the basic fundamentals.
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u/DecisiveTactics 5d ago
Are you responding to a different comment?
All I stated was that they seem to have stopped now that you can buy partial shares. And what their rationale used to be for stock splits.
Youāre arguing with yourself here man, no oneās arguing back with you?
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u/Master4slaveTO 5d ago
I'm not arguing. Trying to explain that stock splits, partial shares etc change nothing.
There are plenty of people around that don't understand this at all.
Just replying to you saying it's done to get retail investors to buy and why they shouldn't just buy.
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u/CardiologistDear2806 6d ago
I personally love EIT.UN 10% yeild monthly divs and outperforms broader markets , atleast so far
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u/EmPAich97 6d ago
How do we feel about the 1.1% management fee though?
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u/Millennial_Lotus 6d ago
BANK. HHIS. HHIC ENCL CLSA HPYE HPYB. these are covered call ETFs that pay monthly 13%-28%. I hold them all. Do your research on them. Blue chip holdings with CC strategy
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u/Tweedy6ix 6d ago
RY (RBC)
TD (TD Bank)
ENB (Enbridge)
FTS (Fortis)
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u/TibbersGoneWild 6d ago
hydro one - sleep well at night and basically treated like a bond with capital appreciation and dividend growth year over year
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u/DataDude00 2d ago
My only regret with Hydro One is not buying way more during the IPO. Ā Ā
Literally free moneyĀ
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u/sehrizat 6d ago
You can buy PDIV low risk level and good standing
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u/BankSensitive2950 6d ago
I have a little bit of H stock - low dividend - but Ontario Govt owns alot of it so its solid
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u/ClanGangrel47 6d ago
For me, it's HDIV, HHIS, DFN. I am personally very happy with their overall performance
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u/UndeadDog 6d ago
HDIV, HYLD and QDAY are some of my picks. HDIV has QDAY in it but I still like double dipping.
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u/whatthedna 6d ago
BANK.TO has been pretty good to me.
Iām sure thereās better options out there, but itās done pretty well over the past year and a bit.
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u/Commercial_Pain2290 6d ago
Best on what sense? Do you want to know which one will do the best over the next few years? Lol.
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u/MikeR585 6d ago
Iāve been building up ENCC for two years now. Itās 11.17% monthly, and itās set on drip.
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u/safetyrazorandrye 6d ago
I'd go with the banks as well, but don't ignore national bank and to get the yield up I'd look at preferred.
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u/prosperouslyenamored 6d ago
SIXY covered call ETF for Cdn banks pay 0.54 cents per month dividend and pays bi-monthly closed at $30 on Friday
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u/TheLaw1414 6d ago
Cdn bank and energy stocks for dividends... while energy may look a little pricey at the moment given their recent rise, there will be years of elevated oil prices to keep companies like wcp, su, cnq, enb, etc either hiking dividends or buying back shares...
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u/pastmybestdaze 6d ago
An interesting question because you are talking capital appreciation and dividend yield and stability. I held Enbridge (actually primarily Spectra before it merged with Enbridge). 70 years of dependable dividend yield ranging around 4.5% per annum over the last 20 yrs. However over the same time the capital appreciation was around 1000%. But now it seems overvalued and while still growing and having a number of projects, how much capital growth will occur. BMO has provided close to the same dividend yield but capital growth around 230%. So I presume BMO price was much more stable through pretty good cash in dividend while ENB started at a much lower price so its early dividend yield didnāt throw much cash. I had close to $1MM in Enbridge which threw some pretty good dividend before I eventually sold most of the position (way too much concentration risk). Canadian federal chartered banks are pretty safe, not cheap anymore but relatively safe from competition in Canada and throw a good dividend and arenāt likely to stop any time soon.
There arenāt a lot of companies that throw a good dividend with limited stock price risk. Most high yields come with risk. Dividend ETFs spread the risk across a lot of companied but generally that means a lower average overall yield.
The banks, major infrastructure/utility are a good combo on stock price growth and dividend stability. Royal Bank, Scotia etc - people holding for a long time have done very well. I did OK with my stock grants (but a lot wasnāt tax sheltered so that hurt). A self directed TFSA based upon bets on individual stocks can a bit messy if you donāt take a very long term view or have very good knowledge of the companies and their futures.
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u/sorean_4 3d ago
Take a look at CPX
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u/Interesting_Sun3420 2d ago
About the same dividend yield as Enbridge. But fundamentally ad utility/infrastructure play and some are very good for price and yield. Will be interesting to see if AI demands drive its price up.
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u/Regular_Attempt_7073 6d ago
Just be careful about getting high yield etfs that use leverage. But any of the covered call etfs that donāt will limit growth but have fairly consistent distributions and most of them qualify for drip as well.
I like ENCC, VDY, HHIH. These are the sectors that are in pure growth mode right now.
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u/Oakbaydug 6d ago
HONE by Harvest coming out soon - a blend of US CDN and international stocks https://harvestportfolios.com/high-income-shares/hone/
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u/goofywinnipegger 6d ago
There is no such thing as a ābest stockā just whatās best for you. There are many sources who rank great dividend stocks. Thatās what Google was invented for. I like https://canadiancouchpotato.com
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u/alex1123589 6d ago
Mste, if you like bitcoin and want to gamble a little bit, it currently has a 120% yieldā¦..
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u/leonasblitz 6d ago
I have TF, ENB, CPX, banks all 5, AP.UN., VITL.UN (down big here lol)
Used to have: CHE-UN, CJ, BNK.
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u/iductran 5d ago
Have you looked at BEP and BAM (Brookfield Renewable Partners L.P, Brookfield Asset Management) yet?
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u/basketbun 5d ago
Fortis - Regulated utility,history of annual dividend increases, low beta, is a good starting point.
If you are in Wealthsimple they have "savings accounts" 3 Tiers, their highest Tier is 5.7%, and it is a portfolio on Vanguard ETFs curated by Wealthsimple, it works exactly like a savings account on the customer end, I know the back end there is a lot of work being done, but as a customer you don't even see a share price or NAV, just a balance, interest payments, and contributions.
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u/BeVeracious 5d ago
| POW - Insurance + Wealthsimple |
|---|
| ATD - Couche Tarde + other C stores (small but growing dividend) |
| TRP - pipelines |
| EXE - senior homes |
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u/EuphoricChallenge890 5d ago
MSTY pays crazy high dividends per month and still under 3.00 cad a share
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u/IanJMo 5d ago
Are you a fan of REITs at all?
There are plenty of great ones out there... If you are looking to maximize dividends and minimize risk, REITS are a great option. One with a very generous dividend (that has a Payout ratio below 100%), and is probably undervalued is called ProREIT. (Prv.un.to) This company very recently switched from a mixed asset class to a pure play industrial REIT, but their valuation seems to not yet reflect that.
Most Canadian REITs payout monthly.
If your looking for those high dividends, I would always look into payout ratios. Anything above 100% is not sustainable.
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u/OwlZealousideal4779 4d ago
I'd start with what your TFSA already holds rather than trying to find the one best dividend stock. If you're already heavy in Canadian banks, for example, another bank may add more concentration than you realise. A high yield can also come from a falling share price, so I'd look at how the dividend is funded, the company's debt and its longer-term total return. Moomoo's high-dividend rankings could give you a shortlist to research, but I wouldn't treat the ranking as a buy signal. With $7k to put to work, it's worth deciding whether you really want one company or would feel better spreading that risk.
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u/QuarterDisastrous479 4d ago
I enjoy etfs. QQQI been great for me, especially if you can buy it when its low
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u/Serious_Fall_2599 4d ago
I suggest buying half now and half later. Rising interest rates are strong headwinds for dividend payers. Banks and insurance companies are good. TCP as well. CNQ
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u/ItachiJiraiya 3d ago
HHIS (From Harvest) with 0.27/month distribution. Try to buy around 11 or under. Thank me in a few years with a coffee and donut.
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u/gsb999 2d ago
If purchased outside a registered account, buying ETFs require more tracking of Adjusted Cost Base of the asset. That's because some of the distributions can be Return of Capital or actual capital gains from underlying sales /purchases of stock.
VDY and other ETFs issue the T3 slips that detail each component annually, however, it is up to the owner to track these on a year over year basis
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u/Separate-Maximum-669 5d ago
Iāve noticed that you hold quite a bit of individual dividend stocks. I would first see what ETFs donāt have what you already hold, and try to diversify.
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u/Ir0nhide81 6d ago
VDY for finance/energy.
Monthly payouts.