The Top 10 Canadian Dividend Stocks for Outstanding Performance in…

Dividend-paying stocks that combine healthy balance sheets with hefty yields can provide investors with steady incomes, cushion against market downturns, and grow investments at a healthy clip.

In the third quarter of 2024, the top-performing dividend-payers included steel firm Stelco STLC, gold company Lundin Gold LUG, and independent power producer TransAlta TA.

To find the quarter’s 10 best-performing income-focused stocks, we screened the Morningstar Canada Index—which measures the performance of Canada’s broad regional markets, targeting the top 97% of stocks by market capitalization—for companies with a forward dividend yield of at least 1.5%, excluding real estate investment trusts.

The Best-Performing Canadian Dividend Stocks of Q3 2024

1. Stelco STLC
2. Lundin Gold LUG
3. TransAlta TA
4. Cogeco CCA
5. Leon’s Furniture LNF
6. Industrial Alliance Insurance and Financial Services IAG
7. CI Financial CIX
8. Canadian Imperial Bank of Commerce CM
9. Brookfield Infrastructure Partners BIPC
10. Dundee Precious Metals DPM

How Have Dividend Stocks Performed?

Over the past quarter, the Morningstar Canada Dividend Growth Index, which tracks the performance of Canadian stocks with a history of uninterrupted dividend growth and the capacity to sustain that growth, rose 11.3%. The Morningstar Canada Dividend Yield Focus Index, which tracks the performance of high-quality, dividend-paying Canadian stocks, rose 12.0%. In the 12 months leading up to Sep 30, the dividend growth index gained 28.3% and the dividend yield focus index gained 21.8%.

The overall Canadian stock market, as measured by the Morningstar Canada Index, has gained 10.3% on the quarter and 27.3% on the year.

Yields and Metrics for Q3’s Best-Performing Dividend Stocks

Stelco
Steel firm Stelco rose 81.5% in the third quarter and gained 91.5% over the past 12 months. Trading at C$66.71 per share, its stock has a forward dividend yield of 4.5%. Stelco pays investors an annual dividend of C$3 per share. The stock has a quantitative Morningstar Rating of 3 stars.

Lundin Gold
Gold company Lundin Gold rose 46.1% in the third quarter and gained 96.3% over the past 12 months. At C$29.25 per share, its stock has a forward dividend yield of 3.67% and an annual dividend of C$1.07 per share. It has a quantitative Morningstar Rating of 2 stars.

TransAlta
Independent power producer TransAlta gained 45.2% in the third quarter and rose 20.5% over the past 12 months. The stock’s C$14.02 price gives it a forward dividend yield of 1.71%. TransAlta pays investors an annual dividend of C$0.24 per share. The stock has a quantitative Morningstar Rating of 3 stars.

Cogeco
Telecom services firm Cogeco rose 40.2% in the third quarter and gained 19.2% over the past 12 months. Trading at C$71.50 per share, Cogeco stock has a forward dividend yield of 4.78% and an annual dividend of C$3.42 per share. It has a quantitative Morningstar Rating of 4 stars.

Leon’s Furniture
Specialty retail firm Leon’s Furniture gained 31.8% in the third quarter and rose 66.7% over the past 12 months. Trading at C$29.96 per share, its forward dividend yield is 2.67%. Leon’s Furniture pays investors an annual dividend of C$0.80 per share. It has a quantitative Morningstar Rating of 3 stars.

Industrial Alliance Insurance and Financial Services
Diversified insurance firm Industrial Alliance Insurance and Financial Services gained 31.4% in the third quarter and rose 35.4% over the past 12 months. At C$112.10 per share, Industrial Alliance Insurance and Financial Services stock has a forward dividend yield of 2.93% and an annual dividend of C$3.28 per share. It has a quantitative Morningstar Rating of 3 stars.

CI Financial
Asset management firm CI Financial rose 29.2% in the third quarter and gained 24.3% over the past 12 months. Trading at C$18.41 per share, CI Financial stock has a forward dividend yield of 4.35% and an annual dividend of C$0.80 per share. The stock, which has no economic moat, is trading near its fair value estimate of C$16 per share. It has a Morningstar Rating of 3 stars.

Canadian Imperial Bank of Commerce
Diversified bank Canadian Imperial Bank of Commerce rose 28.9% in the third quarter and gained 65.1% over the past 12 months. Trading at C$82.96 per share, Canadian Imperial Bank of Commerce stock has a forward dividend yield of 4.34% and pays investors an annual dividend of C$3.60 per share. The stock, which has a narrow economic moat, is currently trading at a 19% premium to its fair value estimate of C$70 per share, leaving it moderately overvalued, leaving it with a Morningstar Rating of 2 stars.

Brookfield Infrastructure Partners
Regulated gas company Brookfield Infrastructure Partners gained 28.7% in the third quarter and rose 26.8% over the past 12 months. The stock’s C$58.73 price gives it a forward dividend yield of 3.72%. Brookfield Infrastructure Partners pays investors an annual dividend of C$2.18 per share. The stock has a quantitative Morningstar Rating of 3 stars.

Dundee Precious Metals
Gold company Dundee Precious Metals rose 28.4% in the third quarter and gained 65.7% over the past 12 months. At C$13.70 per share, Dundee Precious Metals has a forward dividend yield of 1.58% and an annual dividend of C$0.22 per share. It has a quantitative Morningstar Rating of 3 stars.

What Is the Morningstar Canada Index?

The Morningstar Canada Index measures the performance of Canada’s broad regional markets, targeting the top 97% of stocks by market capitalization. The index does not incorporate environmental, social, or governance criteria.

What Is the Morningstar Canada Dividend Yield Focus Index?

The Morningstar Canada Dividend Yield Focus Index captures the performance of a portfolio of high-quality, dividend-paying securities.

It’s a subset of the Morningstar Canada Index (which represents 97% of the equity market capitalization) that includes only stocks that pay dividends. The stocks are screened for economic moat and financial strength compared to others in their sector. Real estate investment trusts are excluded.

The 25 highest-yielding stocks are included in the index, weighted by the dollar value of the dividends. See the full rulebook here.

The Best Dividend Stock Leaders: More Ideas to Consider

Investors who would like to find more top-performing or cheap dividend stocks can do the following:

• Review the full list of stocks in the Morningstar Canada Dividend Yield Focus Index. Stocks with Morningstar Ratings of 4 or 5 stars are undervalued, according to our metrics.

• Use our Morningstar Stock Screener tool to find the best dividend stocks according to your specific criteria. You can search for stocks based on their dividend yields, valuation measures like price/earnings ratios, and more.

• When it comes to buying stocks, it’s more than just dividends. Read here how valuations and competitive advantages—known as economic moats—matter when it comes to a stock’s potential for outperformance.

• Watch this video to learn how Morningstar uses the star rating, moat rating and other metrics to evaluate stocks.

Companies that are not formally covered by a Morningstar analyst are statistically matched to analyst-rated companies, allowing our models to calculate a quantitative star rating.

This article was compiled by Bella Albrecht, edited by Lauren Solberg, and reviewed by Andrew Willis.

This article was generated with the help of automation and reviewed by Morningstar editors.

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