Looking for some cheap Canadian dividend stocks? We’ve got your back. Canada has a long history of stable & prosperous businesses, and with recent changes to tax laws, Canadian dividend stocks are more appealing than ever. Each of the stocks you will learn about in this article offers a solid dividend yield and the potential for capital gains. The best and cheapest Canadian dividend stocks include Artis REIT, Corus Entertainment, Suncor Energy, Telus, and Canadian Natural Resources. Except for the first two, these stocks have market caps of multiple tens of billions of dollars and are safe investments.
When choosing the right stocks, look for companies with a strong track record of paying dividends. This will help ensure that you receive regular income from your investment. Also, consider the company's overall financial health. Companies in good financial shape are more likely to maintain their dividend payments even during tough economic times.
Dividend stocks are a special type of stock that pays a dividend or distribution of corporate earnings to eligible shareholders. They're an attractive type of investment for investors seeking income-producing assets. If you're a new investor and you don't have a lot of capital to invest, finding cheap Canadian dividend stocks can be very rewarding. In this post, you'll learn about the cheapest top dividend-paying stocks in Canada.
Top 5 Cheap Canadian Dividend Stocks To Buy Now
The five top Canadian stocks below offer strong yields and upside potential. These stocks trade at compelling valuations, so any of them would make a great addition to your portfolio.
| Company | Industry | Share Price (CAD) | Market Capitalization |
| Artis REIT (OTCMKTS: ARESF) | Real Estate | $5.50 | $792.50 million |
| Corus Entertainment (OTCMKTS: CJREF) | Entertainment | $1.21 | $240.80 million |
| Suncor Energy (NYSE: SU) | Energy | $28.92 | $37.88 billion |
| Telus (NYSE: TU) | Telecommunications | $18.37 | $26.22 billion |
| Canadian Natural Resources (TSX: CNQ)(NYSE: CNQ) | Energy | $56.61 | $62.67 billion |
#1 Artis REIT
Artis REIT is a closed-end real estate investment trust (REIT) based in Winnipeg, Canada, with a market capitalization of $792.50 million as of July 2023. In Nov 2022, its stock traded at $9.29 per share, with approximately 22% year-to-date losses.
Artis has a diverse portfolio of real estate assets in Canada and the United States, including retail, industrial, and office space. It currently has a 6.5% dividend yield at the current market price.
The COVID-19 pandemic resulted in physical activity restrictions that harmed Artis's business growth in 2020, resulting in a 97.2% year-over-year drop in adjusted earnings.
Nonetheless, the company staged a massive financial recovery the following year, with 2021 adjusted earnings jumping to $2.86 per share, significantly higher than its pre-pandemic earnings of $0.72 per share in 2019. As of July 2023, shares are trading at $5.50, almost twice what it was in 2021 but almost half of what it was in November 2022.
Despite previous years’ challenges, Artis has proven to be a resilient company with strong long-term prospects.
#2 Corus Entertainment
Corus Entertainment has been one of Canada's worst-performing dividend stocks this year, but it is worth buying now. This Toronto-based media and content company has a market cap of $240 million as of July 2023, and its stock was down 52% year to date on November 2022 at $2.28 per share. At this price, its stock provides an excellent 10.5% dividend yield.
Corus Entertainment's revenue increased by nearly 31.8% over the last five years, from 2016 to 2021. While recent quarters' earnings have been negatively impacted by factors such as inflationary pressures and reduced advertising spending, the company's long-term growth outlook remains positive as it works on quality original content.
That is one of the main reasons its stock is worth buying now if you can hold it for the next 10 to 20 years. Corus Entertainment may be a better investment for some, but it is a good choice for long-term investors willing to wait out short-term challenges.
#3 Suncor Energy
Oil prices have fallen due to recession fears and lower demand in China due to the lockdown, with West Texas Intermediate (WTI) crude down more than 35% from its March peak. Suncor Energy's (TSX: SU)(NYSE: SU) stock price has followed suit and is currently trading at a 24% discount to its 52-week high.
However, despite the drop in oil prices, Suncor Energy's cash flows from operations increased 65% yearly in the first six months of this year to $7.3 billion. As a result, the company increased its dividend by 12% to $0.47 per share in May, bringing its dividend yield to a juicy 4.6%. So, considering all of these factors, many investors are bullish on Suncor Energy.
#4 Telus
Telus is a leading telecommunications company in Canada with a long history of paying dividends to shareholders. The company typically raises its dividend twice a year and has stated that it expects to grow dividends by 7-10% annually in the medium term.
This is supported by expected strong growth in earnings before interest, taxes, depreciation, and amortization (EBITDA) of 8-10% in the coming years. In addition, Telus expects to generate strong cash flow growth in 2023 as it completes its copper-to-fiber initiative and focuses on constructing the 5G network.
Shares of Telus have dropped from over $34 per share a few months ago to around $29 per share and then dropped further down to $18.37 per share as of July 2023. This is overdone and creates an opportunity for investors to buy the stock at a discount and take advantage of its solid 4.65% dividend yield. Given the company's strong growth prospects, Telus is a great long-term investment for income investors.
If you're looking for a defensive stock to add to your portfolio for 2023 and beyond, consider purchasing shares of Telus. Since mobile and internet access remain necessities even in a down economy, revenue should be relatively stable. Telus's ability to increase prices as its costs rise is another factor that makes it a desirable investment during times of high inflation.
#5 Canadian Natural Resources
With a current market capitalization of $62.67 billion as of July 2023, Canadian Natural Resources (TSX: CNQ)(NYSE: CNQ) is Canada's largest energy company. The company is a major oil and natural gas producer with one of the most diverse product portfolios and untapped resources in the Canadian energy sector.
CNRL increased the quarterly base dividend by 28% to $0.75 per share for 2022 and recently announced a $1.50 per share special quarterly distribution. The stock has dropped to $68 from a high of around $88 in 2022 as the price of WTI oil fell from $120 to the current level of $90. It has continued to drop throughout 2023, reaching $56.61 per share on July 2023.
The sell-off appears to be overdone, and investors can now earn a 4.4% yield on the base dividend plus the bonus distributions, which are expected to continue into 2023.
CNRL has increased its dividend for the past 22 years, and with a strong balance sheet and ample cash flow, there's no reason to think that this streak will end anytime soon. With the recent pullback in the stock price, now is an attractive time for income-seeking investors to pick up shares of this high-quality Canadian energy company.
How To Save Money When Buying Canadian Dividend Stocks
When it comes to investing, there are a lot of different strategies that can be employed to make money. One popular strategy is to invest in dividend stocks. Dividend stocks are a type of stock that pays regular cash dividends to shareholders.
These dividends can provide a valuable source of income, especially in retirement. Canadian dividend stocks can be especially attractive since they offer capital appreciation and income generation potential.
Furthermore, many Canadian dividend stocks offer tax-advantaged status, which can further boost returns. However, Canadian dividend stocks can also be expensive, so it is important to know how to save money when buying them. Here are a few tips:
Tip #1 Look For Discounts
Many Canadian online brokerages offer discounts on dividend stocks. These discounts can add up to significant savings over time.
Tip #2 Avoid The Big Banks
The big banks tend to charge higher fees for buying and selling Canadian dividend stocks. As such, it is often cheaper to use a smaller online brokerage.
Tip #3 Use Dollar-Cost Averaging
When purchasing Canadian dividend stocks, it is often best to do so gradually through a process known as dollar-cost averaging. This involves regularly investing a fixed sum of money into the stock (e.g., monthly or quarterly). By buying shares over time, you will smooth out any short-term fluctuations in price and end up paying an average price lower than the current market price.
Tip #4 Stay Diversified
One of the best ways to reduce risk is to diversify your portfolio across several asset classes and investments. This will help to protect you from losses if any particular investment underperforms. Regarding Canadian dividend stocks, consider investing in a dividend ETF or mutual fund rather than individual stocks. This will give you instant diversification and professional management at a relatively low cost.
Following these tips will help you save money when buying Canadian dividend stocks and make them more affordable for long-term investors.
Cheap Canadian Dividend Stocks FAQs
Is it better to take dividends or salary in Canada?
In Canada, there are several factors to consider when deciding whether to take dividends or salary from your company. The first is the tax rate on salary. If the tax rate is high, it may be beneficial to take a salary. The second is company revenues. If company revenues exceed the business limit, salaries may be a more equitable way to distribute profits.
Do you pay taxes on dividends?
Ordinary dividends are taxed at the investor's marginal tax rate, which could be as high as 37% for individuals in the highest tax bracket. In contrast, qualified dividends are subject to preferential tax treatment and are taxed at lower capital gain rates.
How do I avoid paying taxes on dividends?
There are a few ways to avoid paying taxes on dividends. One way is to maintain a lower tax bracket. This means keeping your taxable income below the threshold at which taxes are owed. Another way is to invest in tax-free accounts, such as a 401(k) or IRA. These accounts allow you to grow your money tax-free. Finally, you can invest in educational funds, such as a 529 plan. These plans offer special tax breaks for educational expenses. Investing in these types of accounts can reduce or eliminate your taxes on dividends.
Can you live off dividends alone?
For many people, dividends provide a way to supplement their income from Social Security or pensions. In some cases, dividends may be enough to cover all expenses associated with maintaining a pre-retirement lifestyle.
However, living off dividends requires careful planning and discipline. Investors must carefully consider the number of dividends they will need to live comfortably and ensure that their portfolio is diversified enough to generate the required income level.
