Finding a top Canadian stock which provides not only strong dividends, but excellent

growth prospects at a valuation that makes sense isn’t easy. That’s partly because the
set of such companies out there isn’t infinite, but it’s also limited with the options
the TSX has to offer. That said, I’ve been a long-time proponent of Restaurant
Brands (TSX:QSR) as a top option for investors seeking relative balance in their
portfolios. The company’s mix of dividend income and long-term capital appreciation
alongside a defensive business model makes this a stock worth considering. Here’s
why I think this fast food giant is a top option to consider for those looking to kickstart
their portfolio with $1,000 or more.

Defensiveness matters

We are certainly in increasingly turbulent times. The volatility index has picked up, as
geopolitical risks remain heightened globally and inflation still isn’t yet beaten in markets
like the U.S., meaning interest rate risk has materialized in a way many didn’t expect.

Accordingly, some are calling for a recession around the corner, as a reflection on the
various risks to the economy, but also some finance-related risks with the inverted yield
curve and the recent triggering of the Sahm rule. In such an environment, I think
investing in companies with durable and sustainable business models that will be
around in a decade or two for sure are companies worth considering. Restaurant
Brands portfolio of world-class quick service restaurant banners (which include
Canada’s favourite Tim Horton’s, as well as Burger King, Popeye’s and other
restaurants) provides consistent and durable cash flow in any economic environment. I
think such companies will demand a premium, if and when the stuff really hits the fan.
That’s been the core of my thesis for a long time, and that’s partly why QSR stock has
been so stable for so long, in my view.

Fundamentals also matter a great deal

Investing in a company like Restaurant Brands for its defensive profile is one thing. But
if the company isn’t performing on a quarterly basis and delivering value to
shareholders, this isn’t a stock that should be considered. Fortunately for investors,
that’s not the case. The company continues to provide strong growth, driven in part by
footprint expansion, particularly in higher-growth global markets. This has led to 5%
year-over-year system-wide sales growth this past quarter, with the company bringing in
strong margins and solid net income growth. Those are the kinds of fundamentals I
think are important to consider, particularly for a company that pays out a significant
portion of its earnings in dividends. Restaurant Brands’ 3.1% yield is one I believe is
sustainable long term, as I expect cash flows to continue to grow at a relatively
moderate pace over the long haul.
Beyond BCE Stock: Here Are 2 Better Dividend Buys

BCE (TSX:BCE) stock’s incredibly swollen 8.6% dividend yield could give any long-term
passive income investor a nice raise. At writing, the stock is down more than 36% from
all-time highs. Still, a bottom may not be in the books quite yet, especially as the firm
looks to move through a rather turbulent industry environment, one that’s fiercely
competitive and heavily weighed down by the last few years’ worth of interest rate hikes.

Now that the Bank of Canada is cutting and investors are looking forward to far lower
rates in 2025 and 2026, questions linger as to whether the likely environment to come is
conducive to a sustained rally for the hard-hit telecom plays. Indeed, low rates are a bit
of a tailwind, but an ailing firm like BCE needs more than just lower rates to shrug off
recent pressures and march back to highs not seen in more than two years.

Investors shouldn’t reach for the super-high yield if there’s a chance of losing a
considerable sum of capital. In the case of BCE, it still has challenges ahead of it that
make the name more worth a wait-and-see type of play than a deep-value bargain
hiding in plain sight.

CN Rail

At around $155 and change, CN Rail (TSX:CNR) stock boasts a 2.2% dividend yield;
while not nearly as impressive as BCE’s, CN Rail has an incredible dividend-growth
track record that could extend for many decades. The stock is in a rough patch right
now, off just shy of 14% from its high. For the quarter, the company’s revenues were
higher while profits were lower, partly due to wildfires and labour disruptions. Indeed, it
was a somewhat decent result, given the magnitude of operational hiccups. Either way,
I think now is a great time to be a net buyer while the firm looks to chug ahead and
move on from transitory headwinds that weighed it down in recent months. CN Rail is a
dividend growth hero, and the track may be smoother than the one behind it.

Enbridge

Enbridge (TSX:ENB) stock looks as timely as ever with its still-high dividend yield
(6.4%), modest multiple (22.1 times trailing price-to-earnings), and accelerating share
price momentum. Over the past year, ENB shares are up over 30%. And with few signs
of slowing down, I do view the pipeline behemoth as a top pick for someone seeking
solid total returns over the next three years. Though analysts recently downgraded the
stock to hold from buy due to less clarity on the catalysts ahead, I still think the name is
a great long-term buy for those who want to get paid a huge dividend to wait for the next
leg higher. Sure, a pullback could strike at any time.
Understanding the best yielding dividend
stocks
If you are looking to invest in high yielding dividend stocks of companies like Microsoft,
ExxonMobil, AT&T, Verizon, Apple, Texas Instruments or Shell Oil, then do so right
away, because they are safe, less risky than others and provide super-high dividend
yields. Selling your low yield stocks and investing purely in the ones that provide
increased dividends regularly in consecutive years, are stocks of companies in various
industry sectors – services, healthcare, consumer goods, financial, utilities, industrial
goods, telecom and so on. Master Limited Partnerships like the energy sector with oil
and gas companies, Real Estate Investment Trusts like apartments, hotels, offices,
storage, and others who lease out their properties to tenants, regulated investment
companies and closed-end mutual funds are just a few examples of companies that
give high yielding dividend stocks.

Dividend growth investing is an investment strategy that does two things simultaneously
– provides capital appreciation and a steady income. So, investing in businesses that
are capable of increasing their dividends prove that they are more stable and
dependable, unlike others that perform well for short periods but are highly volatile.
Increasing your income supply safely through high dividend stocks is a good option,
especially appealing to investors who bank on these dividends in their retirement years.
Ensure the companies you invest in have healthy and positive dividend safety scores.

Any stock with a dividend yield in excess of 4% is termed a high dividend stock. Mature
companies that do not have the need to infuse more capital into their businesses prefer
to share their surplus cash with shareholders in the form of high paying dividends.
There are some companies that, for tax purposes, necessarily have to redistribute their
available funds to investors. There are still others who offer generous dividends by
applying for debts and mortgages, and while this may work for a short time, is not
sustainable in the long run.

There are benefits and risks in all types of dividend stocks. Diversity is the key here. Do
your research, observe market movements, invest wisely and enjoy high yields from
dividend stocks.
2 TSX Dividend Stocks to Buy for 2025

Fortis (TSX:FTS) is a good example of a dividend stock that should benefit as interest
rates decline in Canada and the United States. The utility company uses debt to fund
part of its growth program. A sharp jump in interest rates in 2022 and 2023 drove up
borrowing costs, which is the main reason investors unloaded the stock as they worried
that higher debt expenses would hurt profits and reduce cash which can be used for
dividends. With interest rates now moving lower, Fortis should be able to borrow at
more favourable rates. This will help the bottom line and can potentially enable the
company to add more projects to the pipeline. Fortis is already working on a $26 billion
five-year capital program. The investments will raise the rate base from $38.8 billion in
2024 to $53 billion in 2029. As new assets go into service, there should be a steady
boost to revenue and cash flow. This will help support planned dividend increases of 4%
to 6% per year through 2029. Fortis just raised the dividend by 4.2%, marking the 51st
consecutive annual dividend increase from the company. Investors who buy the stock at
the current price can get a dividend yield of 4%. There are other stocks that offer higher
yields, but the annual dividend growth is tough to ignore, and each distribution hike
increases the return on the initial investment.

Bank of Nova Scotia (TSX:BNS) underperformed its peers in recent years, but a
turnaround plan launched by the new CEO could rekindle investor interest in the stock.
The company is focusing its new growth investments primarily on the United States and
Canada. Under previous management, Bank of Nova Scotia spent billions of dollars on
acquisitions in Peru, Chile, and Colombia, as well as Mexico. The international
businesses will remain part of the portfolio for the near future, but some could be
monetized at some point with funds redirected at different opportunities.

Bank of Nova Scotia’s US$2.8 billion investment this year in a 14.9% stake in KeyCorp,
a U.S. regional bank, is an example of the type of deals that could be on the horizon.
The bank also recently created a new executive position to focus on growing Bank of
Nova Scotia’s business in Quebec. Bank of Nova Scotia trades near $72 at the time of
writing. The stock is up about 27% in the past year, but still sits well below the $93 it
reached in early 2022. Falling interest rates should lead to lower provisions for credit
losses (PCL) in the coming quarters as borrowers with too much debt get a bit of a
break on interest charges. The turnaround plan will take time to deliver results.
Investors, however, who buy BNS stock at the current level can get a dividend yield of
5.9% while they wait.

Fortis and Bank of Nova Scotia pay attractive dividends that should continue to grow. If
you have some cash to put to work in a buy-and-hold portfolio targeting dividends and
total returns these stocks deserve to be on your radar.
CT REIT
CT REIT(TSX:CRT.UN) is another interesting dividend stock you can
consider if you are looking for long-term returns. The REIT has a
distribution yield of 5.8% that it pays in 12 monthly installments. It is
among the few REITs that grow its distribution annually by over 3%,
helping you beat inflation. A $500 investment now can buy you 32
units of CT REIT and pay you $30.49 in annual dividends in 2025.

While this may look like a small amount, if you opt for CT REITs
dividend reinvestment plan (DRIP), it will buy more units from the
dividend money and compound your dividends. In 10 years, the unit
count could compound to 56.5 units and the dividend amount on these
units could increase to $70. It more than doubled your passive income
without any extra investment. You can keep investing $500 per month
in this stock and accumulate more units to build a sizeable passive
income.

CT REIT’s cash flows are also resilient as the company has little
mortgage. Most of its debt is interest only. As it is the real estate arm
of Canadian Tire, it gets a priority to buy, develop, and enhance all
Canadian Tire stores. There is no concern around occupancy or default
on rent as the parent company is channelling its rental expenses
through the REIT to earn dividends.
Invest $19,769 in This Stock for $100 per Month in Passive

Dividend Income

Are you looking for a high dividend stock that can provide you with at least $100 per
month in passive income? If so, you’re in luck. The TSX is replete with high yield stocks
that can stuff your account with cash, and if you hold such stocks in a TFSA, you pay no
taxes on them. With that said, not all stocks pay monthly dividends. Most pay quarterly.
To find a high yield stock that pays monthly and is also a good investment would
normally take some digging.

First National

First National Financial (TSX:FN) is a Canadian non-bank lender. Its shares cost
$40.33 and pay a $0.204167 monthly dividend. That’s $2.45 per year. So, the yield is
approximately 6.07%. In order to get $100 per month from a stock yielding 6.07%, you
need to invest $19,769. If you are 33 or older and have never made a TFSA
contribution before, that’s less than 25% of the sum you can invest in 2024 ($95,000).
Here’s the math on how $19,769 invested at 6.07% yields $1,200 per year, or $100 per
month:
As you can see, First National’s dividend will provide $100 per month if you invest
$19,769 in it. The question is, will that dividend actually keep coming in?

Industry and company health

Whether First National can keep paying its dividend depends on industry and company-
specific factors. FN is a lender, and interest rates are coming down, so that’s one factor
that argues the dividend will have to be cut. On the other hand, First National is a well
run company with sensible lending standards. Although it does lend money to
Canadians who are ineligible for bank loans, it mainly seeks out borrowers who are
excluded from financing for demographic characteristics, not truly poor credit. Also, the
company is very profitable, with a 32.6% net income margin.

Dividend coverage

One indicator that First National’s dividend will continue being paid on time is the fact
that the dividend is well covered by the company’s earnings. First National has a 64%
payout ratio, which indicates that the company could see its earnings decline 30% and
still keep paying its dividend. As we’ve seen, First National stock has a high yield that is
well supported by earnings. The real question is, where will things go from here? The
Bank of Canada is in the midst of cutting interest rates. It has cut rates three times this
year, and is expected to cut once more at its meeting today. There is a possibility of
FN’s earnings declining because of this. However, the company’s payout ratio is modest
enough that a dividend cut appears unlikely.
Hydro One
Hydro One (TSX:H) is an electrical transmission and distribution utility
company. Thus, this shouldn’t be a stock that’s on any list of
potentially explosive growth stocks. Focusing on distributing,
generating, and transmitting electricity from a variety of sources
(including renewables), Hydro One is certainly a much more bland type
of company, and one many wouldn’t expect to see grow particularly
fast.

That said, one look at the company’s stock chart above, and it’s clear
that investors have seen strong growth over the past year. Shares of
Hydro One stock have more than doubled over this timeframe, with a
particularly steep move higher over the past year.

Much of this has to do with expectations of surging electricity demand,

driven by AI. If the projections are even close to correct, this is a
company that could stand to benefit, particularly in a low interest rate
environment. With a dividend yield of 2.7%, the company’s distribution
will immediately become more attractive as interest rates continue to
come down. And with the Bank of Canada just announcing a jumbo 50
basis point rate cut, this rhetoric should continue to pick up steam.

Like Shopify, Hydro One has seen strong growth over the past year,
with a significant revenue surge of nearly 10% and EBIT growing at
roughly the same rate. Should the company continue to grow its
earnings at this level, I think 5% dividend growth (alongside some
multiple expansion and continued capital appreciation) could certainly
provide market-beating returns. However, if demand accelerates much
faster than expected in the world of utilities, H stock could be one that
could soar much higher much faster. We’ll have to see how this plays
out, but this is a stock I’m increasingly bullish on right now.