Stock Analysis

Three TSX Dividend Stocks Offering Yields From 3.9% To 5.5%

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As the global economy navigates through a phase where artificial intelligence and technology sectors show signs of volatility yet promise for long-term growth, investors might consider the stability offered by dividend stocks. In the context of a broadening market leadership and ongoing bull market trends, dividend-paying stocks represent an appealing option for those looking to diversify their portfolios and tap into steady income streams amidst fluctuating market conditions.

Top 10 Dividend Stocks In Canada

NameDividend YieldDividend Rating
Bank of Nova Scotia (TSX:BNS)6.50%★★★★★★
Whitecap Resources (TSX:WCP)7.05%★★★★★★
Power Corporation of Canada (TSX:POW)5.59%★★★★★☆
Enghouse Systems (TSX:ENGH)3.61%★★★★★☆
Secure Energy Services (TSX:SES)3.51%★★★★★☆
Boston Pizza Royalties Income Fund (TSX:BPF.UN)8.61%★★★★★☆
Russel Metals (TSX:RUS)4.32%★★★★★☆
Canadian Natural Resources (TSX:CNQ)4.01%★★★★★☆
Royal Bank of Canada (TSX:RY)3.84%★★★★★☆
Sun Life Financial (TSX:SLF)4.65%★★★★★☆

Click here to see the full list of 31 stocks from our Top TSX Dividend Stocks screener.

Here we highlight a subset of our preferred stocks from the screener.

Aecon Group (TSX:ARE)

Simply Wall St Dividend Rating: ★★★★☆☆

Overview: Aecon Group Inc. operates as a construction and infrastructure development company serving private and public sector clients in Canada, the United States, and internationally, with a market cap of approximately CA$1.05 billion.

Operations: Aecon Group Inc. generates revenue primarily through its Concessions and Construction segments, with CA$59.50 million from Concessions and CA$4.33 billion from Construction.

Dividend Yield: 4.5%

Aecon Group Inc. reported a significant earnings growth of 330.4% last year, showcasing robust financial health despite a challenging market environment. However, its dividend yield at 4.49% remains below the top Canadian payers and is poorly backed by cash flows with a high payout ratio of 4232.8%. While the dividends have been stable over ten years and recently increased to CAD$0.19 per share, future sustainability is questionable as earnings are projected to decline annually by 21.5% over the next three years.

TSX:ARE Dividend History as at May 2024
TSX:ARE Dividend History as at May 2024

Power Corporation of Canada (TSX:POW)

Simply Wall St Dividend Rating: ★★★★★☆

Overview: Power Corporation of Canada, an international management and holding company, operates in the financial services sector across North America, Europe, and Asia with a market capitalization of CA$26.21 billion.

Operations: Power Corporation of Canada generates revenue primarily through its segments: Lifeco with CA$23.51 billion, Power Financial - IGM at CA$3.67 billion, and Alternative Asset Investment Platforms and Other contributing CA$1.59 billion.

Dividend Yield: 5.6%

Power Corporation of Canada has demonstrated a stable dividend history with a 10-year track record of reliable and growing payouts, supported by a payout ratio of 49.9% and cash flow coverage at 28.4%. Despite this, its dividend yield of 5.59% is below the top quartile in the Canadian market. Recent earnings growth was notable, jumping to CAD$722 million in Q1 2024 from CAD$326 million year-over-year, reflecting strong financial performance. However, shareholder proposals on ESG and compensation alignment were rejected at recent meetings, indicating potential governance concerns that could influence investor sentiment.

TSX:POW Dividend History as at May 2024
TSX:POW Dividend History as at May 2024

Suncor Energy (TSX:SU)

Simply Wall St Dividend Rating: ★★★★☆☆

Overview: Suncor Energy Inc. is an integrated energy company with operations in Canada, the United States, and internationally, boasting a market capitalization of approximately CA$70.80 billion.

Operations: Suncor Energy's revenue is primarily derived from its Oil Sands segment, generating CA$23.76 billion, and its Refining and Marketing operations, which produced CA$31.51 billion, alongside a contribution of CA$2.17 billion from Exploration and Production.

Dividend Yield: 4%

Suncor Energy maintains a low payout ratio of 35.2%, ensuring dividends are well-covered by both earnings and cash flows, despite a forecasted average earnings decline of 7.6% over the next three years. Dividend payments have shown volatility over the past decade, reflecting an unstable dividend track record. Recently, Suncor reported increased production and refining volumes in Q1 2024 but faced declining net income year-over-year to CAD$1.61 billion from CAD$2.05 billion, alongside rejected shareholder proposals regarding climate commitments at its annual meeting.

TSX:SU Dividend History as at May 2024
TSX:SU Dividend History as at May 2024

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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