April 26, 2021

When investing in Canadian stocks it is important to adopt a systematic approach to understand which one you buy will grow over  time on a daily or monthly basis. Since investor’s have to search hard to find pockets of value in today’s volatile market, here are some best Canadian dividend stocks 2021 which offer excellent buying opportunities and can deliver great returns over the next couple of years, and why you should invest in them.

2021 has a strong case for dividend stocks in Canada

Agreed that 2020 was a difficult year as far as dividend investment was concerned, but there is no reason why you should not have them in your portfolio in 2021. Since incentives from fixed income aren’t attractive at the moment, dividend paying companies offer a better choice for a regular income stream. Considering the chances of capital appreciation coupled with dividend tax credit makes this even more of a viable investment opportunity.

When it comes to attracting foreign investment, Canada has all the right ingredients that makes it an attractive destination. Foreign investment in Canadian dividend stocks is a high-stakes global competition because of the competitive advantages the country offers. The other key takeaways are:

  • With comparatively low marginal effective tax rate, Canada has a strong corporate tax advantage over other countries.
  • Canada has a wonderful talent pool, favourable immigration policies, stable social and political system and greater market access not only across North America, but globally.
  • From strong tax advantages to better access to different markets, Canada ticks all the right boxes for foreign investment.

Comparison with other North American jurisdictions

Even though the tax rates in Canada are extremely competitive, a simple comparison with statutory rates does not tell the whole picture. It is the marginal effective tax rate which takes into account other taxes, based on capital and business inputs, that tell where the last dollar of your business investment goes. This is one reason why Canada has retained a corporate tax advantage over the US. 

Most Canadian companies which do public trading, pay dividends that are eligible for the dividend tax credit, whereas US dividends do not qualify for the same, and are therefore taxed at the same rate as income or interest earnings.

Top Canadian dividend stocks to hold in 2021 as a non-Canadian

Many factors may bring about a change in rankings, but as of this month here are the details of best Canadian growth dividend stocks to pick as a solid investment for your portfolio.

#1- Algonquin Power & Utilities Corp

       (Dividend yield: 3.84%).       

        Industry: Utilities-Renewable

Apart from a renewable energy business, the company engages in solar power, water, electricity and natural gas distribution across twelve states in the US with a list of nearly 770,000 customers through its two subsidiaries, Liberty Power and Liberty Utilities.

#2-Alimentation Couche-Tard Inc: 

     ( Dividend yield:0.84%)

      Industry: Grocery stores

Couche-Tard serves more than nine million customers daily across the globe by offering them merchandise, motor fuel, aviation fuel and services through a chain of 10,000 convenience stores in 48 US states and ten provinces in Canada, apart from other countries.


     ( Dividend yield: 4.84%)

      Industry : Telecommunication Services.

This second largest telecom company of Canada provides a range of communication products and services like data, voice TV, video and entertainment. Telus also has a significant presence in the healthcare and business segments and a customer base of over 13 million subscribers, which is about 99% of the country’s population.

#4-TC Energy:

     (Dividend yield:5.88%)

     Industry: Oil & Gas Midstream

As a supplier of almost 25% of the natural gas requirements across North America, TC Energy has a strong portfolio of storage facilities, diversified assets and power generation plants using a gas pipeline network of over 57,000 miles. With access to two of North America’s most prolific gas basins, TC Energy is known for delivering energy in a sustainable manner across the US, Canada and Mexico.


     ( Dividend yield:4.45%)

      Industry: Utilities- Diversified

With assets of nearly $30 billion, Emera is one of North America’s leading diversified services and energy companies engaging in the field of power and gas transmission, apart from other utilities services. With operations in Canada, US and four Caribbean countries, Emera has a range of commercial, industrial and residential customers on its growing list. The company also has investments in renewable energy assets.


     (Dividend yield:7.22%)

      Industry: Oil & Gas Midstream

Enbridge is Canada’s largest natural gas distributing company, catering to over 3.7 million customers in Quebec, Ontario, New Brunswick and New York. It supplies natural gas through its extensive network of 192,000 miles of pipelines spread across North America and the Gulf of Mexico, through five reported segments. Enbridge also holds significant assets in 3000 MW of renewable generation capacity.


    ( Dividend yield:3.6%)

     Industry: Utility transmission

A great stock to hold at the time of market volatility is Fortis, because of its reliability in serving the fields of power and natural gas. The dividend of 3.6% may look negative in the overall stock market, but it often outperforms when the market looks unsecure. Moreover, Fortis is very well covered and is expected to grow by 5-6% CAGR over the next five years. So buy it and let the income roll in.

The US stock market could be overvalued

While on the surface the US economy may seem to be doing okay, if you look under the veil, it is not as good as it looks. High quantity companies, in struggling sectors, are in the worst financial shape of their lives. Stocks that rise faster than they can grow their dividends have seen their yields falling. The average dividend yield in the S&P 500 is at its all time ten year low level of just 1.55%. Moreover, the average stock has a price-to-earning ratio of 34, the highest since the Great Recession.

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