hey guys it's adrian here the canadian in a t-shirt and today i'll be breaking down my
top two favorite canadian dividend stocks of all time i've been investing in these
companies for years and i pick these stocks because they all pay out a generous dividend
they have a long history of increasing their dividends and they're from different industries
helping you build a diversified portfolio of the canadian market the stock market right now is in
the middle of a downturn but i don't care about the short term because these are quality companies
with a long-term future so i'm using this as an opportunity to buy more shares at a discount and
lock in even higher dividend yields as i've talked about in these past videos these are established
and secure stocks that i will hold on to for life and collect that passive income every month or
every quarter so without further ado my top two canadian dividend stocks are td and rio can and
when i say they're my favorites i mean it these are some of the first stocks i ever bought almost
10 years ago and i've never sold them i believe in transparency and credibility so i would never
recommend a stock that i don't personally own and looking here at my dividend tracker spreadsheet
you can see that riocan td and nbridge are my largest holdings in my tfsa and that's just
my tfsa on top of that i also own shares of td and enbridge in my margin account that's because
canadian dividends get preferential tax treatment in a margin or non-registered account
but reits do not so i only hold my reits like rio can in my tfsa to avoid these taxes
i talk about this strategy in greater detail in my members only videos where i also reveal
my full tfsa and rrsp portfolio so hit the join button down below to watch these exclusive videos
and help support my channel i'm gonna be breaking down why i think these stocks are great choices
so i'll be talking about things like dividends versus capital appreciation the payout ratio
and the amount to qualify for a drip if you need a refresher on these basics click the pop-up at
the top right to check out my dividend investing guide and then come back to this video so with
that let's jump into my all-time favorite dividend stocks in canada starting with td toronto dominion
bank ticker symbol td dot to td is actually my all-time favorite dividend growth stock and it's
easy to see why td is the second largest company in canada right behind royal bank you can't get
any more established than that for two centuries td has been a staple of the canadian economy
and one of the most reliable dividend investments in the world i love this fact td has never missed
a dividend payment in 165 years that's amazing even through world war one world war ii the great
depression the housing crash of 2008 the pandemic of 2020 td always pays out a generous dividend you
can't go wrong investing in any of the six big canadian banks i personally own shares in all of
them because these banks on the canadian side are so well regulated far more than they are in the us
that security and reliability makes the canadian banks some of the best dividend investments in
the world but the reason why i choose td as my favorite is because they have been aggressively
expanding into the united states and it has certainly paid off earlier this year td acquired
first horizon bank one of the largest banks in the u.s this is a 13 billion deal that will close in
early 2023 and when that happens td will be one of the top six banks in the united states in fact td
now has more branches in the u.s than they do in canada this is a huge advantage over the rest of
the canadian banks because the united states has almost nine times the population of canada that's
a huge market that they have access to and will continue to expand as i've talked about over the
past three years even on the canadian front alone td is so universal with bank accounts
mortgages credit cards insurance investing and more td has over 17 million customers in canada
that's 53 of the adult population that is the definition of a canadian staple because of fears
of a recession high inflation and rising interest rates the market as a whole is down which makes
sense when interest rates rise that hurts the profits of all companies but when it comes to
the financial sector higher interest rates can actually help banks earn income from mortgages
and loans so when the interest rates rise that boosts the revenue of course higher interest rates
also make it less likely for clients to take on new loans but for td's existing loans this
does help their bottom line it's not quite this simple but my point is that rising interest rates
hurts companies across the board especially their stock price but for banks like td there is a
silver lining and they can actually benefit from it that's why i'm using this as an opportunity to
buy more shares of td at a great discount and with this current drop in their share price
their dividend is even better with a great yield of 4.1 percent paid out every quarter in the past
six months the share price has dropped by about 20 to a price of 87.20 for me this is great news
the share price dropped by 20 but the dividend remained the same so now i can buy cheaper shares
and lock in that higher dividend yield in fact td actually increased their dividend in january
by 13 and even with this higher dividend td still has an extremely low payout ratio of 43
which is incredible that means that only 43 of its profits go out to investors through dividends
leaving it with 57 of its net income to reinvest in itself and grow as a company and further
expand in canada the united states and around the world because of this super low payout ratio td's
dividend is very secure and we can expect another dividend raise next year in fact td has increased
its dividend at an average rate of 11 per year over the past 25 years that's exactly what i
want to see from a long-term dividend stock and because of this reduced share price it's now that
much easier to qualify for a drip with td remember a drip allows you to reinvest your dividend and
use it to buy more shares of a company rather than receiving cash and the best part is you
don't pay any commission at all when you use a drip to buy extra shares this is the best way to
invest in the long term allowing your dividends to compound automatically giving you true exponential
growth in the case of td you'll need about eight thousand five hundred and ten dollars right now
to qualify for a drip let's go through the math with a dividend yield of four point one percent
our eight thousand five hundred and ten dollar investment would give us three hundred and forty
eight dollars per year in dividends or eighty seven twenty two per quarter td currently has a
share price of eighty seven twenty so every three months our dividend will allow us to purchase an
extra share of td for free and then we receive the remaining two cents as cash and yes 8 500 is a
lot of money but you don't have to reach this drip threshold all at once just invest what you can and
work your way up to it over the course of years that's what i did to find out how i calculated
this drip amount click the pop-up at the top right to check out my drips explain video where i go
over the long-term benefits of drips and i provide a free excel spreadsheet to help you calculate
the drip amount for any stock you want looking at the stock price over the past three years you can
see an overall upward trend even with the ups and downs we had a huge drop in 2020 market crash but
td was able to recover very quickly and reach new highs again we're in the middle of a market
downturn but if you zoom out over 20 years you can see this undeniable upward climb where these
massive crashes in the short term are really just small dips in the long term that's why td
is my favorite dividend growth stock not only do i earn consistent and increasing dividends
year after year i also get incredible long term capital growth if you're not sure how to actually
buy these stocks click the pop-up at the top right to watch my quest straight tutorial where i give a
step-by-step walkthrough of how to buy stocks and etfs using quest trade my favorite online broker
if you'd like to get started with questrade click my referral link at the box below and you'll get
50 in commission free trade rebates for the first 30 days when you sign up that basically means that
your first 10 stock trades will be commission free that saves you 50 plus i'll get a small referral
bonus as well next we move into the real estate sector with one of the largest reits in canada
called riocan ticker symbol rei dot un dot to a reit is a real estate investment trust this is a
collection of hundreds of real estate properties packaged together as a stock and the rent from
all these properties goes back to investors as dividends or distributions they're basically a
way to tap into the real estate market through the stock market so you don't need a hundred thousand
dollars for a down payment check out my reits explained videos to learn more ryokan is actually
the second largest reit in canada and they are the largest retail reit so they own hundreds
of large shopping centers and their tenants are the individual stores who pay them rent
ryokan focuses on quality retail properties in dense urban areas with high traffic of customers
including both enclosed shopping malls and open air plazas of course the retail sector was
devastated during the 2020 lockdowns but the good news is that ryokan focuses on essential services
in fact the majority of ryokan's properties are anchored by grocery stores and pharmacies even if
we saw another lockdown these essential businesses would remain open and continue to pay rent one of
ryokan's priorities is attracting quality tenants across the staples of canadian retail like loblaws
shoppers drug mart canadian tire walmart metro and winners and they keep it diversified they don't
want to be too reliant on any single retailer so none of their tenants can earn more than 10
of their total revenue but they do focus geographically on six major urban centers the
gta vancouver calgary edmonton ottawa and montreal these six cities make up 91 percent of the revenue
which allows them to concentrate on desirable high income neighborhoods with growing populations
those are the neighborhoods where they're developing massive residential and multi-use
complexes these will be luxury high-rise units with the first few floors reserved for retail
which is a great business model those stores will have built-in foot traffic of course
these new developments cost money but ever since stores reopened from lockdowns ryokan boasts a 97
occupancy rate that reliable and increasing monthly rent allows ryokan to pay generous
dividends every month and with the recent drop in the share price their dividend is even better with
a fantastic yield of 5.1 percent if you buy shares of ryokan right now you'll be buying them at a 24
discount from just a few months ago and that's exactly what i'm doing rising interest rates
hurts the real estate sector as a whole since these building projects are funded by loans but
with quality and reliable tenants ryokan is still profitable and will absolutely recover
it's just a matter of time and once these exciting new developments are complete and
open for business we can also expect significant capital gains collecting dividends every month
is wonderful especially when you've locked in a great yield of 5.1 percent but i always say having
a large dividend is not enough we have to make sure it's sustainable and when it comes to reits
using a dividend payout ratio is not the best metric remember for my reits explained video
i broke down how net income or earnings is not the best way to evaluate a reit
since it doesn't account for the depreciation of its properties when it comes to reits you should
look at the funds from operations or ffo instead the ffo is much more representative of the true
cash flow of the reit so to tell if a dividend is sustainable we look at the ffo payout ratio
in the case of rio can they have an ffo payout ratio of 57 that's great news and it's already
in line with their target goal of 55 to 65 this number tells us that only 57 of the income from
regular business activities goes out to investors as dividends or distributions leaving the rest to
buy more properties fund more projects and expand many reits have an ffo ratio above 90 percent so
this tells us that rio kans dividend is definitely sustainable and if things continue we can expect
another dividend increase within the next year when the share price takes a dip i get excited
not only can i lock in a higher dividend yield but it makes it that much easier to qualify for a drip
you'll only need four thousand seven hundred and ten dollars invested to qualify for a
drip and this is a monthly drip with a dividend yield of five point one percent our investment
of four thousand seven hundred and ten dollars would give us two hundred and forty dollars a
year in dividends or twenty dollars every month the share price is currently at twenty dollars
so every month our dividend will buy us an extra share that's 12 new shares every year
totally on autopilot looking at the stock price over the past five years you can see the massive
crash in march 2020 when businesses were shut down and the retail sector was decimated it
hasn't returned yet to those previous highs but it is getting there now with rising interest
rates and fear in the market we're seeing a smaller but still significant slump of 24 but
it certainly will recover retail rates are not dividend growth stocks like td the priority here
is not long-term capital appreciation we care more about that monthly passive income but if
you buy shares right now at this discounted price we will earn great capital gains once the market
recovers in addition to locking in that higher dividend yield for both of these stocks make sure
you are buying them on the toronto stock exchange in canadian dollars always include the dot to in
the ticker symbol to ensure you're buying it on the tsx these are canadian companies so there's
no reason to waste money converting them into us dollars and to actually buy these stocks check
out my referral link down below to sign up with questrade my favorite online broker and you'll get
50 in commission free trade rebates for the first 30 days when you sign up and you'll help support
my channel and since these are purely canadian stocks you can also use wealthsimpletrade you can
use my referral link down below to get a 25 sign up bonus as well and if you want to get the most
of your investments make sure you hold these in your tax sheltered accounts like your tfsa
and rrsp to avoid paying taxes on these dividends to learn how to maximize your tax-free growth
check out my canadian tax guide my videos with the silver colored thumbnails so there you have it
those are my top two all-time favorite dividend stocks in canada td is my favorite dividend
growth stock giving me increasing dividends every year and long-term capital appreciation
it's the best of both worlds ryokan allows me to dip into the retail real estate market and
collect monthly dividend income and i'm using this opportunity to buy both stocks at a significant
discount thanks for watching guys and be sure to like comment and subscribe if you found this
video helpful every thumbs up and comment really does help me build this channel on youtube and hit
that bell icon to be notified of my new videos and if you'd like to follow me on instagram or
facebook at canadiant-shirt click my link in the box below or click the links on my homepage thanks
everyone and i'll see you guys on the next episode of the canadian in a t-shirt bye guys
you