Best Canadian Stocks

Best Canadian Stocks to Buy in 2025

Most of the best Canadian stocks pay a dividend. Known for their stability when markets are rough, they also provide income to investors quarterly. Companies in sectors such as utilities, REITs, and banks can protect you against market fluctuations and severe losses.

Yet, not all dividend-paying companies are good investments. Investing in dividend stocks can lead to painful losses and income cuts. The risk of falling for dividend traps or seeing your retirement income plummet due to the wrong stock selection is too frequent.

The market creates bubbles and hurts your portfolio. You worked hard to invest money, and you shouldn’t lose it to the wolves of Bay Street. There is a way you can invest safely in Canadian dividend stocks. We have selected some high-quality stocks to make your life easier.

Best Canadian Dividend Stocks for 2025

When I built my retirement portfolio, I focused on companies showing a combination of safe income and steady growth. My choices include Canadian Dividend Aristocrats (companies showing several years of consecutive dividend increases). I added a few more metrics and used the DSR stock screener to refine my research.

Here are some of the best Canadian Dividend Stocks for 2025:

#10 Telus (T.TO)

#9 Granite REIT (GRT.UN.TO)

#8 Hydro One (H.TO)

#7 Dollarama (DOL.TO)

#6 Canadian Natural Resources (CNQ.TO)

#5 CCL Industries (CCL.B.TO)

#4 Brookfield Corp (BN.TO)

#3 Brookfield Renewables (BEPC.TO)

#2 National Bank (NA.TO)

#1 Alimentation Couche-Tard (ATD.TO)

More Stock Ideas and Sectors’ Insights

Get the Best from the Markets

It is possible to build a portfolio from Canadian dividend stocks only. However, the S&P 500 has outperformed the Canadian market for decades. You might consider adding a few US companies to take advantage of these outstanding returns. I have created a top stocks booklet to help you out.

Each year, I compile a list of stocks expected to do better than the market for Dividend Stocks Rock members. I review the 11 sectors for them and include top picks for each. I’ve decided to share three with you: Communication Services, Consumer Staples, and Industrials. The booklet is a great place to find dividend growth stocks that offer Canadian and US diversification.

Download 6 of my top 27 for 2025 right here:

#10 Telus (T.TO)

About a year ago, Telus was upgraded to a PRO rating of 5. I thought the company would bounce back faster, but it wasn’t the case. My long-term view of Telus hasn’t changed, though.

While the company reported modest revenue growth throughout the year, its cash flow metrics (cash flow from operations, free cash flow and capital expenditure) have improved significantly. The company is covering their dividend from free cash flow and interest charges are under control.

It took longer than expected, but I believe Telus will get out of this rut and make investors happy. It’s only a matter of time.

#9 Granite REIT (GRT.UN.TO)

Granite is a very frustrating REIT to hold. I love the investment thesis which includes the strong need for industrial properties, GRT’s ability to grow its business while growing FFO per unit and distribution increases intact and the high occupancy rate. The financial metrics back this investment thesis as revenue, Funds from operations, FFO per units, payout ratio and occupancy rate are all looking good. Why is GRT frustrating to hold? Because it simply doesn’t get any love from the market. Despite its good numbers, GRT lags the market and fails to generate positive returns.

With a low FFO payout ratio (68% for the first 9 months of 2024), shareholders can enjoy a 4.5% yield that should grow and match (or beat) the inflation rate. This is among the rare REITs exhibiting AFFO per unit growth while issuing more units to finance growth.

#8 Hydro One (H.TO)

From time to time, I hear that Hydro-Quebec should go public and unlock tons of value. However, I understand the government’s provincial point of view of keeping this amazing asset for themselves. Do you know why? Because Hydro-Quebec pays a generous dividend to the government each year!

Well, Hydro One is in a similar situation but you have the possibility of getting a piece of the cake as the Ontario Government decided to sell a part of its stake in this beauty. With 99% of its operations being regulated and 98% of its electric lines being in Ontario, an investment in Hydro One is a pure play on Ontario’s power development. This is the pure definition of a sleep-well-at-night investment. The company expects to invest $1.3B to $1.6B in CAPEX yearly until 2027 which will support their EPS growth guidance of 4-7% and dividend growth of about 5%. The province enjoys a strong and diversified economy and Hydro One will continue to grow by walking in the province’s path.

#7 Dollarama (DOL.TO)

I’m kicking myself for not having Dollarama in my portfolio. Maybe in another life!

DOL has built a strong brand, and its business model (aimed at low-value items) is an excellent defensive play against the e-commerce threat over the retail business. As consumers’ budgets are tight, DOL appears to be an amazing alternative for many goods. Dollarama has been able to increase same store sales along with opening new stores consistently. The introduction of many products under its “home brand” increases the company’s margin. DOL introduced a new price point of $5 for many items, which lends additional flexibility and pricing power.

#6 Canadian Natural Resources (CNQ.TO)

CNQ is a rare beast in its environment that has increased dividends for 25 consecutive years. Yes, it even increased its payouts while everybody was on hold or cutting distributions in 2020. It brings the question: why is CNQ “oil price resistant”?

The company is sitting on a large reserve of cheap oil. According to management, CNQ is profitable with an oil price per barrel of around $35-$40. This enables the company to manage production and capex with greater flexibility. They can then slowdown CAPEX when the oil price is low and produce less. When we are in “full oil bull mode”, CNQ bolsters CAPEX and boosts production generating maximum cash flow. This is exactly what just happened where CNQ dropped its debt and now focuses on rewarding shareholders with share buybacks and dividend increases.

To be clear, I don’t see CNQ as a super powered growth stock for the future. However, with a yield above 4% and a resilient business model, that’s the type of business that will either be very good in your portfolio, or it will go back into hibernation mode paying a secure dividend. In both scenarios, you can be a winner over the long run.

#5 CCL Industries (CCL.B.TO)

Finding an international leader with a well-diversified business based in Canada is rare. Through the major acquisition of business units from Avery (world’s largest supplier of labels) in 2013, the company has set the tone for several years of growth. Bolstered by its previous successes, CCL also bought Checkpoint, a leading developer of RF and RFID, and Innovia in the past few years and announced more acquisitions in 2021. The company is still able to generate organic growth (roughly 4-5%) on top of its growth through acquisitions.

#4 Brookfield Corporation (BN.TO)

I’m keeping BN among my top picks for a third year in a row. The 2024 selection paid off as Brookfield skyrocketed with more than 50% return. I think there is much more to come! Brookfield is amongst the largest players in alternative asset management. As the stock market looks overvalued, many investors will turn toward alternative assets as a way to generate profits and hedge their bets. Those long-term assets require patient capital and a high level of expertise. Brookfield is in a perfect position to provide this service to investors. Even better, BN invests its own capital in many projects. Therefore, it can double-dip by charging a fee on managed capital and making capital gains when selling assets.

#3 Brookfield Renewables (BEPC.TO)

BEP enjoys large-scale capital resources and has the expertise to manage its projects across the world. Management aims for a 5-9% annual distribution increase, backed by double-digit guidance that includes a mix of organic and M&A growth. Investors gravitate toward clean energy, and BEP is well-positioned to attract them.

Following an impressive stock price surge through 2020, the stock has been trending down for the past two years, although there is nothing to worry about. The rise of interest rates on bonds combined with the incredible ride BEP has had is responsible for this correction. In late 2023, management reaffirmed its strong position and ability to generate strong returns over the long haul. The latest results in early 2024 confirmed that BEP is still focused on growth opportunities. In Q2 of 2024, management highlighted the important contract signed with Microsoft to supply 10.5GW to support MSFT’s AI and cloud business energy needs. This could open the doors to more deals with corporations in the future.

#2 National Bank (NA.TO)

There is no secret here as I’m a National Bank fan. It seems that the bank has done everything right over the past 15 years. This big transformation converted a small provincial bank into a serious player in capital markets and the private wealth industries. The Bank is expected to complete a key acquisition of Canadian Western Bank in 2025 which will bring more capital onto its balance sheet (supporting capital market lucrative operations), more synergies (high cross-selling opportunities between CWB’s commercial clients and private wealth management) and a good presence in Western Canada. NA is also doing very well in Cambodia (Aba Bank) and through its door into the U.S. (Credigy).

#1 Alimentation Couche-Tard (ATD.TO)

I might never have another choice for Canadian than Couche-Tard. I’ve looked at grocery stores, but Metro (MRU.TO) and Loblaws (L.TO) don’t offer many growth opportunities. Don’t get me wrong, they are great companies, but I think ATD will do better.

Things are changing quickly around the 7-Eleven deal. ATD has tried to get to the negotiation table to acquire 7-Eleven for a few months now. The Japanese company is trying all means to stay Japanese. The latest chatter was that the son’s founder would buy it back and make it private. The market liked the idea, and the ATD share price rose again. This story isn’t over yet one way or another.

For 2025, I see ATD striking another acquisition. After all, it’s in its DNA. If it’s not 7-Eleven, it will be another chain (maybe Casey’s?… it tried to acquire CASY in 2010). ATD must gain more expertise in growing organically through the sale of read-to-eat and fresh produce. This is how they can mitigate the impact of slowing fuel and tobacco sales over the next 10-20 years.

More Stock Ideas and 3 Sectors’ Insights

In the Top Dividend Stocks for 2025 booklet, you get six dividend stock ideas and learn about their sectors. Get a clear vision for the Communication Services, Consumer Staples, and Industrials so that you do not hesitate when looking at your portfolio.

Download our booklet now!

The Canadian Dividend Stock to Buy in September 2024

The Canadian Dividend Stock to buy in a Nutshell

Franco Nevada operates a royalty-based business model in stable countries such as the U.S., Canada, and Australia.
The company owns a wide portfolio of development projects to fuel future growth.
The closing of Cobre Panama mine since Nov 2023 is an opportunity for investors.

Selecting a gold stock for your top Canadian Dividend Stock to buy in September, Mike? Haha! I know, right? But this one qualifies to be an exception as it shows a great opportunity for dividend investors.

What’s the problem? Production at Cobre Panama has been halted since November 2023. Cobre Panama generated $223M in revenue for Franco-Nevada in 2022 and $248.9M in 2023, making it its most productive (in term of revenue) asset last year.

What is going to happen with the mine is still a mystery. However, FNV business model remains robust and the fact it has no debt will make it easier for management to navigate through trouble waters.

Let’s take a deeper look at it!

Franco Nevada Business Model

First Franco-Nevada is a streamer (meaning it gets royalties paid by mining companies instead of spending lots of capital in exploration and operations). Second, FNV has no debt. So it’s basically sitting on quality assets and reaping rewards like operating a cash printing machine. Here’s a summary of its portfolio:

Franco Nevada assets

Source: August 2024 presentation

Franco Nevada diversification

The company focuses 75% on precious metals (mostly gold with some silver) with a little bit of oil & gas and most of its assets are held in Americas.

Its revenue will fluctuate according to commodity prices, but the company has little expenses compared to a classic precious metal miner.

Investment Thesis

Franco-Nevada doesn’t waste its time operating mines, but rather manages a portfolio of royalty streams. The company owns 64,000 square kilometers of geologically prospective land but will let gold miners spend their own time and money on exploration. Once the miners find worthwhile materials, the royalty will intervene; we like this cash-flow-focused business model.

As FNV is a play on gold and precious metals, it enjoys stronger cash flows when gold prices surge. The company exhibits unparalleled portfolio diversification, offering shareholders some peace of mind in volatile markets. Finally, FNV has virtually no long-term debt. This is an interesting play if an investor is in it for the long game.

However, please note that the company is currently running with conflicts with the Government of Panama (around Cobre Panama). The upcoming Panamanian election on May 5th was highlighted as a critical event. Franco-Nevada expressed hope that the election could lead to a new dialogue with the incoming government, which might facilitate resolving the issues at Cobre Panama. However, it was noted that the new government would not officially take office until July.

This increases the level of risk (more in the potential risks section).

Are you struggling to buy stocks?

The more I read, the more I get confused. There is nothing more frustrating than being on the fence of buying… but never clicking on the buy button.

I once had a lump sum of money to invest and found it hard to narrow down my choices to a few stocks. Building a portfolio and buying stocks while the market sends mixed signals isn’t easy. That’s why I created the Dividend Rock Stars list based on the combination of three metrics creating the dividend triangle.

It’s a stronger list compared to the dividend aristocrats as I combine various metrics on top of dividend growth. By filtering the market to find stocks showing growing sales, growing earnings and growing dividends, we are convinced we can pick among the best Canadian dividend stocks, period. Enter your email below to get the list for free.

Dividend Growth Perspective

Franco-Nevada has been a Canadian dividend stock since its IPO in 2008. Unfortunately, its very low dividend yield will not pay an investor’s utility bills. For that reason, many may decide to pass on it for their retirement portfolios. The company pays its dividend in USD. This is obviously a play on growth and not just income. The company has a strong dividend triangle, and an investor can expect further dividend increases in the coming years. In early 2023, FNV announced another dividend increase of 6% (from $0.32/share to $0.34/share). Again, in 2024, FNV increased its dividend by another $0.02 to $0.36/share (5.9% increase).

Franco Nevada assets dividend triangle

We can see the impact of Cobre Panama closing on its dividend triangle as both revenue and EPS have been affected.

Potential Risks

The company employs a strong business model and relies on royalties rather than being directly linked to commodity price fluctuations. Nonetheless, an investor can expect turbulence when the gold price drops; it’s highly cyclical. As a royalty-based company, FNV is subject to various tax and regulatory risks. Since it receives royalties from several countries, a change in regulation could lead to a change in distribution.

The company is running into legal issues with the Government of Panama. Panama’s Supreme Court declared First Quantum’s Cobre Panama mining contract to be unconstitutional on November 28th. Mining operations were essentially shut down late last week. First Quantum (the mine’s operator) along with FNV initiated arbitration proceedings under the Panama/Canada Free Trade Agreement.

Franco-Nevada expressed hope that the election could lead to a new dialogue with the incoming government, which might facilitate resolving the issues at Cobre Panama. It is clearly testing investors patience.

Final thought

Franco Nevada is a strong Canadian dividend stock, period. While the situation in Panama is a concern, I see it more as a buying opportunity for investors. The rest of the company is well, and Franco Nevada shows no debt. Worse, FNV won’t get royalties from this mine for a while, which will slow down the company’s short-term growth. However, five years from now, I doubt it will significantly impact Franco Nevada’s ability to generate cash flow.

Top 5 Canadian Dividend Stocks to Celebrate

I just published my top 5 Canadian Dividend Stocks for 2024 on the Moose on the Loose for Canada Day!

Since 10 minutes is not much to explore those 5 business models, I thought of giving you more details on each of them.

Waste Connections (WCN.TO)

5-Yr Revenue Growth	11.15 %
5-Yr EPS Growth	8.20 %
5-Yr Div Growth	13.50 %

Waste Connections has refined its expertise in acquiring and integrating smaller players in the same industry. Its business model is recession-proof as solid waste is a given regardless of the economic cycle. We also like the fact that WCN offers a recurring service and is fully integrated. Management has been adept in integrating their acquired companies. Therefore, the business is not only growing but also becoming more profitable. The company has the size to enjoy the resulting economies of scale. Its dividend payment is low, but its dividend growth is strong. Unfortunately, lower-yielding stocks are usually not a good match for the dividend discount model. Unfortunately, you must pay a steep price for quality, considering a PE of 57 and a forward PE of 63. Remember that WCN 5-year average PE is also in that range (65). Therefore, you will not get a good deal anytime soon for this amazing Canadian dividend grower.

TMX Group (X.TO)

5-Yr Revenue Growth	7.80 %
5-Yr EPS Growth	4.65 %
5-Yr Dividend Growth	9.60 %

TMX has worked very hard to diversify its business through derivatives, technology, and data analytics over the past few years. TMX enjoys strong barriers to entry with regulations to generate cash flow while investing its surplus in growth vectors. It disposed of many of its non-core businesses during 2016 and 2017 and, from a regional infrastructure provider, transformed itself into a global technology solutions provider. Recurring revenue now accounts for more than half of total revenues, growing from 40% five years ago. As an exchange, TMX gathers information on the market. Many institutions are prepared to pay good prices to subscribe to such a data feed. This will be a great way to generate recurring revenues going forward. We can see interesting trends from revenue and earnings, which strengthen the dividend triangle.

Intact Financial (IFC.TO)

5-Yr Rev. Growth	15.85 %
5-Yr EPS Growth	7.85 %
5-Yr Dividend Growth	9.45 %

IFC is one of the best managed P&C insurance companies in Canada. Through a strict underwriting process and careful portfolio management, IFC has proven its value to investors over time. Due to its size, IFC benefits from ample amounts of data to improve its underwriting. This also allows IFC to enter smaller niche insurance markets that are usually more profitable. Since the insurance market in Canada is quite fragmented, there are plenty of opportunities for growth in the coming years without any real threats to the IFC business model. The acquisition of OneBeacon opened the door to U.S. business and reinforces IFC’s ability to underwrite insurance for smaller businesses. Intact did it again with the acquisition of RSA insurance for $1.25B in late 2020. In 2023, IFC and RSA acquired Direct Line Insurance Group plc’s brokered commercial lines operations to expand its business in the UK.

Intact Financial expects to continue capturing growth opportunities, aiming for a 10% net operating income per share growth over time and to consistently outperform the industry ROE by at least 500 basis points annually. Intact Financial is focusing on expanding its digital capabilities to enhance customer experience and operational efficiency. The company is also investing in data analytics and artificial intelligence to improve risk assessment and underwriting processes.

Have you noticed something?

If you look at those three Canadian dividend growers, you will notice they have three things in common:

They all offer a low yield and a high dividend growth policy.
They all show a strong dividend triangle. Those Canadian companies are thriving.
They all show great total return performance in the past 10 years.

The future looks bright for those companies as they operate sound businesses with robust financial metrics. We wish they were in our portfolio to enjoy the past ten years of growth. You may feel like you missed a great opportunities, but there are several companies showing a similar profile.

Do you want to find more companies like this?

My investment strategy has been built around low yield, high dividend growth companies showing strong dividend triangles. I wrote this guide to help you find those and build a stronger and safer portfolio for your retirement. You can download it here:

Canadian Natural Resources (CNQ.TO)

5-Yr Revenue Growth	12.90 %
5-Yr EPS Growth	28.65 %
5-Yr Dividend Growth	22.50 %

In a world where the West Texas Intermediate (WTI) would always trade at $75+ per barrel, CNQ would be a terrific investment. It is sitting on a large asset of non-exploited oilsands and reaches its breakeven point at a WTI of $35. What cools our enthusiasm is the strange direction oil has taken along with the fact that oilsands are not exactly environmentally friendly. Many countries are looking at producing greener energy and electric cars. This could slow CNQ’s ambitions. However, CNQ is very well positioned to surf any oil booms. The stock price has more than doubled in value since the fall of 2020. It has previously invested very heavily, and it is now generating higher free cash flow because of past capital spending. CNQ exhibited resilience in 2020, and this merits a star in their book! If you are looking for a long-term play in the oil & gas industry, CNQ appears at the top of our list at DSR. We also appreciate CNQ’s shareholder-friendly approach, as it will return 100% of free cash flow to shareholders after hitting $10B in net debt.

CCL Industries (CCL.B.TO)

5-Yr Revenue Growth	5.20 %
5-Yr EPS Growth	2.50 %
5-Yr Dividend Growth	15.30 %

It is quite rare to find an international leader with a well-diversified business based in Canada. Through the major acquisition of business units from Avery (world’s largest supplier of labels) in 2013, the company has set the tone for several years of growth. Bolstered by its previous successes, CCL also bought Checkpoint, a leading developer of RF and RFID, and Innovia in the past few years and announced more acquisitions in 2021. The company is still able to generate organic growth (roughly 4-5%) on top of its growth through acquisitions. You can also rest assured that management’s interests are aligned with yours since the Lang family still owns 95% of CCL’s A shares with voting rights. We appreciate CCL’s capital allocation that includes a mix of dividend, share buybacks, acquisitions and CAPEX. Now that the stock price has returned to normal levels, the company exhibits an attractive PE ratio and can still generate more growth through acquisitions

Low yield, high dividend growth stocks are safer

Focusing on companies with strong financial metrics will help build a more sustainable income for retirement. Once you identify the key elements that made that business thrive, you will be in a better position to determine if the story will continue.

Start seeing your portfolio as your “big” holding corporation like Warren Buffet. Create your own dividend and keep a cash reserve for the bad days. This is how you create a dividend income for life.

Thomson-Reuters (TRI.TO) – Anything but Boring

Thomson-Reuters (TRI.TO) seems pretty boring. After all, software and services for lawyers, accountants, and corporations don’t make us jump to our feet excitedly. However, with a market cap of $110B CAD, 31 consecutive years of dividend increases, and 5-year total returns of 200%, Thomson-Reuters is an industrial stock that is anything but boring.

You can also listen to Mike’s podcast.

Formed in 2008 with the merger of Thomson and Reuters, TRI.TO is mostly known to the general public for its news service and media, but this only represents a few percentage points of its total revenue. Thomson-Reuters’s largest business is selling complex software and services for the legal profession (42% of its revenue), accounting profession (20-25%), and corporations (20-25%). The company was also in the financial data service, with Refinitiv, which it sold to the London Stock Exchange in 2019.

TRI’s Legal Professionals segment sells research and workflow products to law firms and governments. The Tax & Accounting Professionals segment does the same, but for tax, accounting and audit professionals in accounting firms. Its Corporates segment sells a full suite of content-driven technology solutions for small businesses all the way to multinational organizations, including the seven global accounting firms.

Create your own income. Learn how in our Dividend Income for Life Guide!

What’s to like about Thomson-Reuters?

TRI’s generates 80% of its revenue from subscription-based services; this predictable revenue and cash flow is great, as long as the customers stick around. This brings us another strength of Thomson-Reuters: its sticky business model. It sells products and services for complex and regulated domains such as law and accounting.

Through its WestLaw business unit, TRI offers an important service to lawyers. Law firms don’t have the time to jump from one provider to another. With WestLaw and Checkpoint, the tax & accounting software, Thomson-Reuters offers top-of-the-line software to two stable industries. Implementing and learning these services required a high degree if involvement from both TRI and the customers, which tends to cement the relationship between them.

This large customer base to offer cross-selling opportunities. Corporate clients have legal and accounting departments, law firms have accounting departments, etc.

The company generates steady organic growth throughout all segments. The pivot towards cloud-based software should allow it to lower acquisition costs while keeping its existing customer base. The complexity of its fields of business provides a strong barrier to entry against competitors. TRI is well-diversified geographically and enjoys a strong brand name.

Thomson-Reuters revenue, earning per share, and dividend payments evolution from 2014 to 2024 — TRI.TO revenue, earnings per share (EPS), and dividend payments for the last 10 years

The company is heavily investing in innovation, particularly in generative AI, to capitalize on the rising complexity of regulatory compliance and the demand for AI-driven solutions. It made notable progress with products like Westlaw Precision and CoCounsel, and the integration of Pagero to enhance corporate tax and audit capabilities.

Last quarter, Thomson Reuters reported solid results with revenue up 8.5% and EPS up 36%. Total organic revenue growth was 9%, with the “Big 3” segments growing by 10%, driven by strong transactional revenue and seasonal offerings. By segment, growth was as follows: Legal +7%, Corporate +12%, and Tax & Accounting +14%.

Potential Risks for TRI.TO

Selling its Financial and Risk (FR) segment brought in a good amount of cash, but reduced TRI’s business diversification. Following the transaction, TRI’s legal services now represent close to half of their revenues. While this segment is quite stable, it does not show rapid growth. A new technology emerging disrupting TRI’s financial legal services isn’t impossible either. TRI is an important shareholder of the London Stock Exchange (LSE) with a 15% stake. This participation is subject to market fluctuations and highly cyclical volumes.

While TRI counts on its Big 3 segments, the rest of its businesses (news and print) could adversely affect margins and slow overall growth. Finally, we saw TRI’S margin being affected by higher inflation in recent quarters. Multiyear contracts take time to reflect price increases.

TRI.TO Dividend Growth Perspective

Thomson Reuters has increased its dividend every year since 1993, but its dividend growth rate is not very impressive.

Selling Refinitiv in 2019 brought in a healthy infusion of cash into the business. Management bought back shares and authorized another 5M in share buybacks. An investor can expect a low single-digit dividend growth rate from now on, perhaps with nice surprises along the way as we were in 2022 with the 10% dividend increase, followed by another one in 2023. TRI did not disappoint in 2024 with another 10% increase.

Thomson-Reuters pays its dividend in USD.

Create your own income. Download our Dividend Income for Life Guide!

Final Thoughts on Thomson-Reuters

At 1.25% dividend yield, Thomson-Reuters is a low yield stock. It is also high growth. Total returns over 5 years were 200%! TRI has a stable business model that generates consistent cash flow. With its yearly dividend increased, TRI management is showing its confidence for the future.

Management increased the dividend by 10% in early 2024 and expects to buy back for $1B worth of share. Full-year 2024 outlook expects organic revenue growth of approximately 6%.

TRI.TO stock is trading at a high valuation. It’s trading at a lower P/E ratio than its five-year average, but a P/E ratio of 33 and a Fwd P/E ratio of 44 might give you reason to pause. With market expectations high, will Thomson-Reuter be able to innovate to keep high-single digit revenue growth going? It’s certainly worth a look.

Foundational Stocks: TFI International (TFII.TO)

A foundational stock, or core holding, is one you can buy and forget about for 10 years without worry. TFI International (TFII.TO) is such a stock. A sleep-well-at-night investment you know will be around 10 years from now and give you growth. Find out more about TFII.

Build on foundational stocks to create income for life! Learn more in our Dividend Income for Life Guide!

TFI International Business Model

TFI International is one of the largest trucking companies in North America. Its segments include Package and Courier, Less-Than-Truckload, Less-Than-Truckload, and Logistics.

Package and Courier picks up, transports, and delivers items across North America. Less-Than-Truckload picks up small loads, consolidates, transports, and delivers them. The Truckload segment offers conventional and specialized truckload services, including flatbed trucks, tanks, dumps, and oversized. It offers specialized trailers and a million-plus square feet of industrial warehousing space. Logistics provides asset-light logistical services, including brokerage, freight forwarding, transportation management, and small package parcel delivery. TFII hauls compostable and recyclable materials and offers residential waste management services.

With its size and vast network, it enjoys economies of scale, giving it an edge over the competition. While it competes with lower-cost rail transportation, the flexibility of truck transport means there will always be demand.

Another benefit of TFII’s size is that it can buy smaller competitors to fuel its growth. It has completed over 80 acquisitions since 2008.

TFII.TO Investment Thesis

Since TFI International is expanding, it might be time to invest and ride with them for a while. It made a wise move to expand outside Canada since the U.S. and Mexican economies have great potential.

With a larger fleet, TFI will be ready to pick up any available steady growth. Investing in a leader in Canada and North America is a safe bet for any investor looking to build a dividend growth portfolio. The company displays an appetite for further growth by acquisition that bodes well for the years to come. TFI completed the major acquisition of UPS Freight in April 2021 and it’s already a transformational success. The company is expanding its margins as it benefits from additional economies of scale and the network effect.

Below is TFII’s stock price evolution over 10 years, as well as its revenue, EPS, and dividend growth. Note that what looks like a dividend cut in the dividend triangle graph in April 2021 was really a conversion to USD when TFII started paying its dividend in US currency.

TFII could see some headwinds for a bit as many economists expect a recession. However, this also means TFII should remain in a solid position to make more acquisitions as smaller competitors may struggle in this economy.

Potential Risks for TFII

While road transportation beats railroads in flexibility, railroads win on cost. The transportation industry is highly cyclical; stock values could suffer in downturns. Oil prices affect the trucking industry; there is a limit in fuel surcharges companies can add to their bill.

Big fish eating little fish. — TFII will need to gobble up more smaller companies

TFII will have to identify other potential mergers and acquisitions transactions to ensure continued earnings growth. The organic trucking business stay cyclical in the future. The next time we hit a recession, the stock price could drop rapidly. Remember that TFII is a volatile stock. On one earnings day, the stock price fell 8% on weaker-than-expected results. Finally, if there is a tariff war in North America, TFII will be stuck in the middle.

TFII Dividend Growth Perspective

TFII has had consecutive dividend increases since 2016. While it has a 5-year dividend growth rate over 13% (CAGR), the payout ratios remain low. This leaves much room for increases in its dividend payout. We would have liked to see a smoother trend for earnings, but the dividend payouts aren’t at risk for now. In 2023, TFII rewarded shareholders with a dividend increase of 14%, and another one of 12.5% in 2024!

Get more information about creating sustainable dividend income in our Dividend Income for Life Guide.

In Closing

TFI International (TFII.TO) is a great foundational stock for any portfolio. You can be confident that, though volatile, a position in this stock will grow over time. Of course, when we say you can “forget” about a foundational stock for 10 years, we’re exaggerating. It’s still best practice to monitor all your holdings quarterly, including TFII. With foundational stocks, however, I don’t spend much time or dig too deep into the quarterly results unless I see signs of trouble, which I rarely do.

High-Risk High-Reward Stock for June 2024: Allied Properties REIT (AP.UN.TO)

On my buy list since April 2023, Allied Properties REIT (AP.UN.TO) has moved to the top on that list for Canadian stock paying a yield of 4% or more. Allied Properties is still not getting a lot of love from the market due to the negative sentiment around the real estate sector, and even worse for office properties. We continue to believe that AP is a very interesting play. Its stock price decline makes it a good entry point for investors interested in a speculative real estate stock. This is a falling knife—high risk, high reward—so proceed with caution.

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Allied Properties Business Model

Allied Properties is a Canada-based open-end real estate investment trust (REIT). It owns and operates unique urban workspaces in Canada’s cities and network-dense urban data centers in Toronto.

It provides knowledge-based organizations with distinctive urban environments for creativity and connectivity. Allied Properties operates in seven urban markets in Canada: Montreal, Ottawa, Toronto, Kitchener, Calgary, Edmonton, and Vancouver.

Allied engages in third-party property management business, providing services for properties, in which a trustee of Allied Properties has an ownership interest.

AP.UN.TO Investment Thesis

Allied features one of the strongest balance sheets among Canadian REITs. It has much of its capital invested in low-cost projects and is currently paying down higher-interest debt while simultaneously investing in new projects.

AP.UN.TO maintains its unique expertise in managing and developing prime heritage locations, which will continue to be in high demand in the coming years. The REIT also counts on many technology clients, which represent a growing sector in Canada.

There are still concerns surrounding office REITs, but Allied Properties has proven its resilience in difficult times. The 2023 distribution increase (+2.7% in early 2023) and low payout ratio for a REIT were good signs.

AP remains a high-risk, high-reward play; investors must do their due diligence and monitor the occupancy rate and FFO per unit growth.

AP.UN.TO Last Quarter and Recent Activities

Allied Properties did well in its most recent quarter, all things considered, with revenue up 4%, and Adjusted Funds from Operations (AFFO) per unit up 1%. The AFFO payout ratio for the quarter stands at 83.8%. Same Asset NOI (net operating income) from Allied Properties’ rental portfolio was down 2% while Same Asset NOI from its total portfolio was up 2.9%, reflecting the productivity of its upgrade and development portfolio.

AP.UN.TO’s occupied and leased area at the end of the quarter was 85.9% and 87%, respectively. This was lower than the previous quarter. We wish we would see this number go above 90%. Allied Properties remains a speculative play. Below is Allied Properties’ dividend triangle showing the falling stock price but revenue going back up. As always with REITs, look to FFO or AFFO per unit rather than EPS.

Potential Risks for AP.UN.TO

Most of Allied Properties’ income is derived from office properties. We know how the pandemic left a dent in the real estate market, especially for office space. Some workers were eager to return to the office, while others weren’t willing to. Many enjoy working from home and the way we work may be forever changed. There will be demand for quality office buildings, but how we will use offices in the coming years remains uncertain, and parking revenues might be weaker going forward.

AP.UN.TO’s properties are mostly located in Ontario (Toronto) and Quebec (Montreal). This limited geographic diversification can leave it vulnerable to economic changes in these provinces. We saw in their latest quarterly update that both regions had been affected. Fortunately, smaller markets such as Calgary and Vancouver showed strong occupancy rates. The global occupancy rate is at 87% for Q1 2024. We advise to not to enter a position unless you are willing to take the risk.

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Allied Properties Dividend Growth Perspective

When evaluating a REIT, we look for dividend increases that at least match inflation. This is the case with AP.UN.TO. The company has a 2.5% dividend CAGR over the past 5 years and healthy FFO and AFFO growth. An investor can therefore expect 2-3% annual dividend growth going forward.

For the full year 2022, AP.UN.TO’s AFFO payout ratio was 81%. It increased its distribution by 2.7% in 2023 (after a 3% increase in 2022), for an annual distribution payment of $1.80/share. After paying its special distribution in December 2023, AP.UN.TO hasn’t increased its distribution increase yet in 2024 but still shows a healthy AFFO payout ratio of 80%. If AP.UN.TO’s distribution doesn’t increase by the end of 2024, it will lose its dividend safety score of 3 at Dividend Stocks Rock . Allied Properties pays a monthly distribution.

Final Thoughts on Allied Properties REIT

With still much uncertainty around office space use in the future and Applies Properties’ occupancy rate on a downtrend (87% in Q1 2024 vs. 87.3% in Q4 2023 vs 89.5% in 2022), this is a speculative play.

However, AP.UN.TO still has decent payout FFO and AFFO payout ratios (77.8% and 83.8% respectively), making its guidance sustainable. It boasts unique heritage properties in urban areas and clients in the growing technology sector. It also has a strategic objective to establish its urban rental-residential portfolio.

With its stock price at under $17, compared to $21 a year ago and $32 two years ago, and distribution increases matching inflation (though not yet in 2024), this falling knife could be an interesting real estate play. Again, potential high reward, but high risk!