Canadian dividend stocks aren’t on a lot of investors radar. The New York Stock Exchange (NYSE) tends to get the most attention when it comes to stocks. But the Toronto Stock Exchange (TSX) has lots of volume as well. In fact, it has a combined market capitalization of over $3 trillion. Indeed, there are plenty of opportunities to be had in Canada’s largest city.

Some Canadian stocks trade exclusively on the TSX. Others are available on the NYSE as well. While others still only trade over-the-counter (OTC).

Chart showing increasing value of Canadian dividend stocks

Here are the best Canadian dividend stocks to buy and hold:

  • Algonquin Power & Utilities Corp. (TSX: AQN) & (NYSE: AQN)
  • Bank of Nova Scotia (TSX: BNS) & (NYSE: BNS)
  • Exchange Income Corporation (OTC: EIFZF)
  • The Toronto-Dominion Bank (NYSE: TD)
  • Canadian Western Bank (TSX: CWB)

Before we dive into the details of each of these stocks, we’ll consider whether Canadian dividend stocks are a smart investment.

Are Canadian Dividend Stocks a Good Investment?

In general, dividend stocks can be a good hedge against volatility. That is, if they pay consistent dividends. If so, this can help minimize risk and strengthen your portfolio overall.

When it comes to Canadian stocks, in particular, this can be an attractive investment opportunity for Canadians as well as Americans. That’s because foreign stocks can help broaden their portfolio’s horizons. Also many Canadian dividend stocks pay high dividends. And they come from the industries you might expect, such as banking and energy.

Best Canadian Dividend Stocks

Now, let’s take a closer look at some Canadian dividend stocks to buy and hold. With a wide range of market caps and business models, these stocks can give you good exposure to the Canadian market. And they also happen to pay solid dividends.

Algonquin Power & Utilities Corp.

Dividend yield: 4.53%

Algonquin Power is an energy company based in Ontario. It engages in a variety of energy and utility operations. This includes water, natural gas, and electricity through its subsidiaries. The company operates in both Canada and the United States. Unlike some of the other energy companies paying dividends, though, Algonquin also has exposure to renewables. It has long-term contracts in wind, solar, and hydroelectric power totaling over 3 gigawatts and counting. In fact, Algonquin is positioning itself as a renewable power company now. The phrase “Sustaining energy and water for life” is front and center at the top of its homepage.

The company has a market cap of over $11 billion. And it pays a healthy dividend. Its net income and profit margins were down last quarter. But the two previous quarters were well into the green. Still, it had a profit margin of 19.57% and a net income of $103.22 million last quarter. These number easily add up to make Algonquin Power one of the best Canadian dividend stocks on the market.

Bank of Nova Scotia

Dividend yield: 4.54%

Barring a few exceptions, banking is almost always a dependable sector for dividend stocks. Bank of Nova Scotia is not one of those exceptions. This is one of the best Canadian dividend stocks at the moment.

This Toronto-based bank has been around since 1832. It provides both consumer and business banking services in North America and Mexico. Plus it operates more than 900 branches and over 16,000 ATMs in the U.S.

BNS has a market cap of over $76 billion. CNN Business gives the stock a consensus buy rating. This comes with a price target of $79.00. Its most recent earnings report shows strong numbers across the board. Net income rose by 113.68% year-over-year to $3.28 billion. Its diluted earnings per share were up 91.35%. And its profit margin was 33.36%.

Exchange Income Corporation

Dividend yield: 5.03%

Its name may not clue you in. But Exchange Income Corporation is an acquisition-oriented corporation. Its focus is on aerospace, aviation services and equipment, and manufacturing. While special-purpose acquisition companies (SPACs) have been trendy as of late, Exchange Income Corporation has been around since 2002.

MarketBeat gives this stock a consensus buy rating with six buy ratings and one hold. It has a market cap just over $1 billion. The most recent earnings report shows strong numbers as well. Net income was up 527.6% year-over-year to $16.51 million. Its diluted EPS was up 514.29% to 0.43. And its net profit margin rose 374.07% to 5.12%. This makes the Exchange Income Corporation one of the Canadian dividend stocks with a strong chance for future yield growth.

The Toronto-Dominion Bank

Dividend yield: 3.68%

Toronto-Dominion Bank provides a wide range of consumer and business banking services in the U.S. and Canada. TD Bank in the U.S. is a subsidiary of Toronto-Dominion Bank. It is one of Canada’s Big Five banks founded in Toronto… And a strong contender for one of the best Canadian dividend stocks.

In addition to a solid dividend yield, there is plenty good to say about TD. Currently, it has a market cap of nearly $125 billion. Among nine analysts polled at TipRanks, it has five buy ratings, and four hold ratings. Its net income is up 57.7% year-over-year, to $3.54 billion. Its diluted EPS is up 58.68% to 1.92 And its net profit margin increased 24.36%.

Canadian Western Bank

Dividend yield: 2.99%

Last on the list is another bank, Canadian Western Bank. Founded in 1988, Canadian Western is based in Edmonton, Alberta. As its name suggests, it mainly serves western Canada. Recently, however, it has expanded eastward, with a branch in Mississauga, just west of Toronto. Notably, this stock is one of the cheaper stocks on this list with a share price of just over $30.

Canadian Western has a market cap of nearly $3.5 billion. TipRanks analysts have a positive take on it with eight buy ratings, three hold ratings, and no sell ratings. Recent earnings figures are strong, too. Net income increased 38.48% year-over-year to $97.3 million. Diluted earnings per share increased 38.03% to 0.98. And net profit margin saw a modest increase to 36.85%. Despite its humble price, this remains one of the best Canadian dividend stocks for investors to consider.

What Else To Know About Canadian Dividend Stocks

When it comes to these Canadian dividend stocks, it can pay, well, dividends to stay on top of the latest news. While all five of these stocks have good track records, that can change. A company can cut or suspend its dividend payments at any time. Even though this is a risky move for any company (and its stock price), it does happen. So it always makes sense to keep a watchful eye on any dividend-paying investment.

If you’d like to learn about other dividend-paying investment opportunities, we suggest signing up for the Wealthy Retirement e-letter. In it, Marc Lichtenfeld guides investors to the stocks with the best and most stable dividend yields… And away from those at risk of cutting them. All you have to do is enter your email address in the box below to get started.