hey guys it's Adrian here the Canadian in a T-Shirt and today I'll be breaking
down my top 3 dividend stocks for Canadians I picked these three stocks
because they all pay a generous dividend they all have a long history of
increasing their dividends and they all come from different industries giving
you a fairly diversified portfolio of the Canadian market I have a long list of
dividend and growth stocks as well as ETFs and bonds that I personally love
but I think that these three stocks would be a great starting point for any
Canadian investor especially for beginners in their 20s these are stocks
that you should buy and hold for the long run unless something catastrophic
happens I'm planning on holding onto these stocks for life and earning that
passive income by collecting a sweet dividend every three months for the
Canadians watching I recommend holding on to these stocks inside your TFSA
or your RRSP if you have the contribution room this way you won't be
paying any taxes on your dividends or on your capital gains when you decide to
sell I'll dive deeper into TFSA and RRSP strategies in a later
video but for now I'd recommend that you buy these stocks in your TFSA first
then in your RRSP and finally in your taxable accounts so without further ado
my top three Canadian dividend stocks are Enbridge, RioCan and TD
toronto-dominion bank if you haven't been watching my investment series check
out my last video where I broke down the importance of investing in the long run
and the fundamentals of dividend stocks click the pop-up at the top right to
watch that video first so with that let's jump into our first stock Enbridge
Enbridge is one of the largest energy and utility companies in North
America and they're the third largest overall company in Canada their core
business units are oil pipelines natural gas infrastructure and utilities and
Power Distribution. They are also involved in renewable energy mainly
wind generators a good dividend stock is a company which is profitable in
every season no matter what is happening to the global stock market and utility
companies are a perfect example whether there is a stock market boom or a
recession people need their electricity and their gas so utility companies like
Enbridge can afford to pay consistent and generous dividends
year after year out of all the stocks I own, Enbridge pays the highest dividend
yield at a whopping 6.2% in my last video I warned that any company
that pays a dividend larger than 6% is a warning sign but
Enbridge doesn't have any of these red flags their dividend payout ratio is
80% which is right around the industry average for utility companies
that means that 80% of Enbridge's profits go out to investors in the form
of dividends leaving 20% of Enbridge's profits to invest in themselves as a
company this is a good position to be in a lot of the companies with dividends
larger than 6% have huge payout ratios usually above 150 or 200% in
those cases those companies are paying more than double their profits out in
dividends which is not sustainable but with a payout ratio of 80%, Enbridge is
not in that position the dividend yield of 6.2% is already incredible but
it gets even better Enbridge has increased its dividend for
22 years in a row increasing by about 10% every year this is exactly what
we look for in a long-term dividend stock another reason why I love Enbridge
is that it has a huge dividend and a fairly low stock price at around $46
$46 per share because of that you only need to own $3000
of Enbridge stock to qualify for a DRIP. A DRIP
stands for dividend reinvestment plan and that means instead of receiving your
dividend in cash your dividend is used to automatically buy more shares of the
company without paying any commission at all this is the best way to reinvest
your profits and compound your investment giving you true exponential
growth in the case of Enbridge if we invested $3,000 in Enbridge stock the
6.2% dividend would give us $186 a year or
$46.50 every quarter a single share of Enbridge costs $46
so every three months we can afford to buy a new share using just our dividend
if we enroll in a DRIP instead of getting that $46.50 dividend in cash we
will automatically buy an extra share of Enbridge for free and the remaining 50
cents will be paid out to us in cash in this way we get a free Enbridge stock
every single quarter for every $3000 we have invested without a DRIP we can
still manually spend that $46.50 to buy an extra Enbridge stock but it will cost
us between $5 and $10 in commission fees depending on your broker
using a DRIP we don't pay any commissions at all
I'll make a whole video just about DRIPs in the next few weeks I'll explain how I
calculated this $3000 amount and the different strategies I use to
maximize my DRIP benefits looking at the stock chart of Enbridge over the past
year you can see but there have definitely been a lot of ups and downs
but that's okay even if the stock remained flat I would still hold on to
it and collect that 6.2% of passive income year after year in fact
whenever the stock does dip I buy more of it. Enbridge is the third largest
company in Canada and I know that they're not going anywhere
whenever the stock drops in value some people panic and start selling but
that's when I jump in and buy even more stocks at a discounted price I know that
the stock will bounce back up in a month or two and in the meantime I'm still
collecting that 6.2% passive income
my second favorite Canadian dividend stock is RioCan. RioCan is one of the
largest REITs in Canada a REIT is a real estate investment trust it's a large
company that owns hundreds or thousands of properties and rents them out for a
profit REITs are basically a way to invest in real estate through the stock
market most young Canadians cannot afford a down payment in the big cities
like Toronto or Vancouver but you can still tap into the real estate market by
owning stocks in a REIT like RioCan the best thing about REITs is that they're
required by law to pay out a majority of the profits to investors through
dividends essentially this means that a REIT will never cut its dividends
without facing legal and financial consequences. RioCan is one of the
largest REITs in Canada focusing mostly on commercial real estate RioCan owns
hundreds of shopping malls and shopping plazas all across Canada but they also
own significant residential property. RioCan pays a great dividend of 5.4%
but the best part is RioCan pays out its dividends every month not just every
quarter this means that you will get 12 dividends a year whereas most stocks
only pay you 4. This makes sense because RioCan
makes its profits through rent and rent is usually collected once every month so
as an investor RioCan pays you a portion of that rent every single month
another great thing about RioCan is that they have a pretty low dividend
payout ratio of only 60% this means that 60% of their income goes
out the dividends leaving them 40% of their income to buy more
property thus increasing the value of the company and increasing the value of
your stock a lot of REITs in Canada have payout ratios over 80 or 90% so
they don't have a lot of spending money to buy more property and grow the way
that RioCan does since RioCan has this extra spending money they've been
increasing their dividends every year or every two years which is exactly what
you want out of a dividend stock since RioCan pays out its dividends every
month each dividend will be smaller than the dividend you get with Enbridge but
you get them more frequently to qualify for a drip with RioCan you need to own
about $5900 in stocks with a 5.4%
dividend that will get you $318 a year or $26.50
$26.50 a month that's enough to buy yourself a free stock each and every
month while avoiding Commission fees so if you have $5900
invested in RioCan you will receive a free stock every single month that's
12 free shares a year looking at the stock chart of RioCan over the past
year you can see some fluctuations but generally it shows an upward trend it's
not huge growth in value but I don't really need this stock to grow much I'm
happy with holding on to the stock and collecting that 5.4% passive
income every single month and finally my third favorite dividend stock for
Canadians is TD toronto-dominion bank I could have picked any of the five major
Canadian banks RBC, BMO, ScotiaBank, CIBC or TD
honestly all five of them are solid dividend stocks and I personally own all
of them but I would say that TD is my favorite these banks are some of the
best dividend stocks out there that's because in Canada the banks are heavily
regulated far more so than they are in the US. Canadian banks aren't allowed
to deal in risky speculation and so they're able to provide far safer and
more consistent profits than in America for example in the 2008 financial crisis
all the US banks took a major blow requiring buyouts from the government
just to stay afloat the Canadian banks were minimally
affected that security and reliability are why the Canadian banks are some of
the best dividend investments out there TD is the second largest company in
Canada just behind RBC Bank but the reason why I choose TD over the other
big Canadian banks is because TD has invested a lot of money to expand into
the US and they have been extremely successful in fact TD now has more
branches in America than they do in Canada and because of that I think that
TD stock will grow faster than all the other Canadian banks all while providing
a generous dividend along the way TD currently pays out a healthy dividend of
4% paid out every quarter on top of this TD has an extremely low dividend payout
ratio of only 44% that means that TD only pays 44% of its profits to
dividends leaving them 56% of the profits to invest in themselves and
expand also since TD is able to save so much of
its net income every single quarter they have never missed a dividend payment in 162
162 years even better TD increases its dividends almost
every single year TDs price per share is significantly higher than RioCan and
Enbridge at $74 because of this it will take a larger investment to qualify for
a DRIP you'll need to have at least $7400 in TD
stocks with a 4% dividend this will give you $296
$296 a year or $74 a quarter just enough to buy yourself a
free stock in TD looking at the stock chart of TD over the past year you can
definitely see some ups and downs but a general upward trend looking at the past
five years however you can see a much clearer upward trajectory I would call
TD a dividend growth stock giving you the best of both worlds
if this upward trajectory continues in about twenty or thirty years I could
sell the stock and make a considerable profit in capital gains on top of that
I'll be earning myself 4% in passive income every quarter along the
way so there you have it those are my top three best dividend stocks for
Canadians and Enbridge gives you the largest dividend RioCan pays your
dividends every single month and TD gives you the best growth and capital
gains but all three of these stocks will give you consistent and increasing
dividends year after year while giving you decent exposure to
three different industries so buy these stocks and hold on to them for life
to collect that passive income especially if you put them in your TFSA
or your RRSP accounts another important thing to note is that TD and Enbridge
are sold on both the Toronto Stock Exchange and the New York Stock Exchange
make sure that you buy these stocks in the Toronto Stock Exchange the TSX if
you buy them through New York you'll be buying them in US dollars and so you'll
be losing money in currency conversion fees plus you'll have to pay US
withholding taxes on these dividends but if you buy them through the Toronto
Stock Exchange you'll be buying them in Canadian dollars and if you keep these
stocks in your TFSA or your RRSP you will never pay any taxes on these profits
I'll show you what I mean on Questrade which is my favorite online broker if I
just search TD the first one that pops up is TD through the New York Stock Exchange
we do not want this instead search TD.TO to specify the Toronto stock
exchange and you'll see that TSX shows up in brackets and that's what we want
I'll show you a step-by-step walkthrough of how to buy stocks and ETFs through
Questrade in an upcoming video and I'll compare Questrade to other online
brokers I like Questrade the best because they only charge you $5
commission when you buy stocks and they charge you a ZERO commission
when you buy ETFs I'll save a detailed breakdown of Questrade in a later video
but if you want to get started with buying these three stocks in Questrade
click my referral link in the box below to set up a new account and you'll
get $50 of commission free trades and I'll get a small referral bonus too I
hope this video helps you get started with dividend investing in Canada and
please let me know if you have any questions I'll be releasing more stock
pick recommendation videos like my favorite US dividend stocks my favorite
bonds and my favorite ETFs so check those videos out soon thanks for
watching guys and be sure to LIKE comment and subscribe
if you found this video helpful I'll be releasing a new video every single
Thursday and let me know in the comments down below what are some of your
favorite Canadian dividend stocks? Be sure to tune in to my next video where
I'll be returning to my investment series and I'll be breaking down the
difference between stocks and bonds as well as the importance of asset
allocation thanks everyone and I'll see you guys on the next episode of The
Canadian in a T-shirt bye guys