National Bank stock

Canadian Banks Ranking 2025

Think all Canadian banks are the same? Think again.

Your choice could mean the difference between market-beating returns and lagging.

A common belief is that all Canadian banks perform similarly because of the country’s strong banking system. Since the 2008 financial crisis, each member of the Big Six (Royal Bank, TD Bank, ScotiaBank, BMO, CIBC, and National Bank) has taken a different path.

They all benefited from the banking oligopoly in Canada to fund new growth vectors. Fifteen years later, picking the wrong bank will leave much money on the table.

While most have outperformed the Canadian stock market for 5, 10, 15, and probably 25 years, as of March 2025, five of six had outperformed the market, and four also outperformed the ZEB.TO equal weight banks ETF over 10 years.

In other words, two are lagging. So which one is best this year and for decades to come?

Canadian Banks Ranking 2025

#6 ScotiaBank (BNS.TO)

Investment Thesis: International Edge – A Double-Edged Sword

Scotiabank differentiates itself from Canada’s Big Six banks with its extensive international presence, particularly in Latin America. While this provides higher long-term growth potential, it also introduces volatility and risk.

The bank has streamlined its global footprint, focusing on key markets like Mexico, Peru, and Chile. However, it has consistently struggled to outperform its peers.

Growth will depend on optimizing international operations, expanding wealth management, and navigating economic challenges. While Scotiabank benefits from Canada’s highly regulated banking system, its international moat is narrower than competitors, limiting its pricing power abroad.

Potential Risks: Volatility Ahead

BNS’s international presence brings unique risks, including exposure to economic downturns, political instability, and currency fluctuations.

The bank has faced rising provisions for credit losses (PCLs), an inefficient cost structure, and challenges in improving profitability.

Domestically, Scotiabank remains vulnerable to a housing market correction and economic slowdown. Broader macroeconomic risks, such as rising interest rates and trade tensions, add further uncertainty. Despite its international reach, Scotiabank has struggled to achieve superior financial performance compared to its peers, lacking dominant market share in key regions and facing stiff competition in wealth management.

The ONLY List Using the Dividend Triangle

After this first example, you may wonder how I was able to differentiate these positions.

I analyze companies according to their dividend triangle (revenue, earnings, and dividend growth trends), combined with their business model and growth vectors. While this may seem too simple, two decades of investing have shown me it is reliable.

While many seasoned investors also use these metrics in their analysis, no one has created a list based on them before. This is exactly why I created The Dividend Rock Stars List.

The Rock Stars List isn’t just about yield—it’s built using a multi-step screening process to ensure the highest-quality dividend stocks. You can read more about it or enter your name and email below to get the instant download in your mailbox.

#5 Canadian Imperial Bank of Commerce – CIBC (CM.TO)

Investment Thesis: A Safe Bet or a Slow Grower?

CIBC shows a strong focus on domestic retail and commercial banking.

Unlike peers with extensive international exposure, CIBC has pursued U.S. expansion to diversify its revenue streams, particularly in wealth management. However, integrating private banking remains a challenge.

The bank trades at a discount due to its slower growth trajectory, making it appealing to income-focused investors.

Its digital banking platform, Simplii Financial, presents an opportunity for long-term customer retention, while reliance on mortgage lending poses risks in economic downturns. While benefiting from Canada’s banking oligopoly, CIBC lacks the competitive moat of more diversified peers.

Potential Risks: Too Focused on Canada?

CIBC faces significant risks due to its heavy reliance on the Canadian housing market, making it more vulnerable than its peers to rising interest rates and a potential real estate downturn.

The bank’s high exposure to uninsured mortgages could increase loan loss provisions in an economic slowdown. Its domestic concentration further exposes it to Canadian economic cycles, regulatory changes, and potential recessions.

Among the Big Five, CIBC has underperformed in total returns and future growth expectations, with its strong dividend yield coming at the cost of lower capital appreciation. While its U.S. expansion aims to diversify risk, its mortgage-heavy model remains a key weakness.

#4 TD Bank (TD.TO)

Investment Thesis: Canada’s Most American Bank

Toronto-Dominion Bank (TD) stands out due to its strong retail banking franchise and significant U.S. presence.

With the largest branch network of any Canadian bank in the U.S., TD has historically relied on acquisitions and organic expansion for growth. However, recent regulatory scrutiny and an anti-money laundering investigation in the U.S. have limited its expansion opportunities.

While TD benefits from a stable Canadian business, rising interest rates present both an opportunity for higher margins and a risk of loan defaults.

Potential Risks: Can TD Overcome Its U.S. Setback?

TD Bank faces mounting risks due to its U.S. anti-money laundering investigation, which led to a multibillion-dollar fine and asset growth restrictions on its U.S. operations.

This directly impacts TD’s long-term expansion strategy, forcing it to shift focus from aggressive growth to regulatory compliance and operational efficiency.

The bank also remains exposed to the Canadian housing market, where rising interest rates could increase mortgage defaults. Broader economic risks add further uncertainty, including trade tariffs and slowing growth.

While TD’s strong brand and market position remain advantages, regulatory constraints could allow competitors to expand more aggressively, putting TD at a disadvantage.

#3 Bank of Montreal – BMO (BMO.TO)

Investment Thesis: Capital Markets, Wealth Management & U.S. Banking

BMO is a diversified financial institution with a strong presence in Canada and the U.S., generating about one-third of its revenue from U.S. operations.

Its strategic expansion, particularly through the 2023 acquisition of Bank of the West, strengthens its cross-border footprint.

BMO has also been a leader in wealth management and ETFs, leveraging these segments for stable fee-based revenue. However, rising provisions for credit losses (PCLs), integration challenges, and exposure to capital markets introduce volatility to its earnings.

Potential Risks: Can It Manage Rising Risks While Competing with Industry Giants?

BMO’s reliance on wealth management and capital markets for growth exposes it to heightened risk, particularly during periods of economic uncertainty.

Rising provisions for credit losses (PCLs) have significantly impacted earnings, partly driven by the challenges of integrating its Bank of the West acquisition.

The bank faces competitive pressures in traditional banking and the ETF space, where BlackRock (BLK) remains a dominant force.

Additionally, macroeconomic headwinds—including trade tensions and potential recession risks—could lead to earnings volatility. While BMO’s U.S. expansion provides diversification, it also increases exposure to higher credit risks compared to more domestically focused Canadian banks.

#2 National Bank (NA.TO)

Investment Thesis: Western Expansion and Global Investments

NA is the most domestically focused of the Big Six banks, with 73% of its revenue generated in Canada, primarily in Quebec.

Its recent $5B acquisition of Canadian Western Bank is set to expand its presence in Western Canada, creating cross-selling opportunities, particularly in private banking.

The bank has also diversified beyond traditional banking, with significant growth in capital markets, wealth management, and international investments, including ABA Bank in Cambodia and Credigy in the U.S.

Potential Risks: Growing Challenges

National Bank’s strong performance comes with significant risks, primarily due to its heavy reliance on Quebec, which accounts for about 50% of its revenue. This geographic concentration makes it more vulnerable to regional economic downturns than its larger, more diversified peers.

This also explains why it has fallen second this year, considering the economic uncertainty linked to political tensions between Canada and the U.S.

The bank also takes on higher risk through its international investments in Cambodia (ABA Bank) and alternative lending in the U.S. Rising provisions for credit losses, particularly from ABA Bank, add further uncertainty.

Additionally, its exposure to financial markets introduces earnings volatility, while its smaller scale puts it at a competitive disadvantage against Canada’s largest banks.

I discussed NA’s current challenges in more depth in the Q1-2025 earnings review video. You can then fully grasp why it now holds the second position while remaining one of the best banks for investors.

#1 Royal Bank – RBC (RY.TO)

Investment Thesis: Built for Global Growth

RBC is the largest Canadian bank by market capitalization, with a well-diversified revenue model spanning personal and commercial banking, wealth management, insurance, and capital markets.

Over 50% of its revenue now comes from insurance, wealth management, and capital markets, reducing dependence on traditional banking. RBC’s focus on expanding these segments post-2008 has positioned it well for stable cash flows, market-driven profitability, and global growth.

While Canadian banking regulations create high barriers to entry, RBC’s strong international presence enhances its resilience. Its brand strength, extensive client base, and broad service offerings make it a dominant force in the financial sector.

Potential Risks: Housing, Regulation, and Market Volatility

Despite its diversified business model, RBC faces key risks, including exposure to the Canadian housing market, regulatory constraints, and economic downturns, just like any other bank.

Rising interest rates could increase mortgage defaults, impacting its loan portfolio and necessitating higher provisions for credit losses (PCLs).

A potential recession could slow lending activity and increase default rates in both personal and commercial banking. Additionally, regulatory changes could limit profitability, while competition from both domestic banks and global financial institutions pressures RBC to innovate and adapt continuously.

All things considered, it remains the best Canadian Bank option for dividend growth investors.

Find Other High-Quality Stocks: Download the Dividend Rock Stars List

This dividend stock list is updated monthly. You will receive the updated version every month by subscribing to our newsletter. You can download the list by entering your email below.

This isn’t just a list of high-yield stocks—it’s a handpicked selection of Canada’s best dividend growth stocks backed by detailed financial analysis.

✅ Monthly updates
✅ Full dividend safety ratings
✅ 10+ Metrics with filters

Enter your email to get the latest Canadian Dividend Rock Stars List now!

Final Thoughts: Don’t Overdo It!

I’m a foodie, and I love cooking. I particularly like adding spices to get the right taste in a good recipe.

But one thing I don’t do when I cook is to open my cabinet and select sea salt, pink salt, lava salt, Kosher salt, Celtic salt, smoked salt, and a pinch of Fleur de Sel all for the same recipe.

You probably know why, as the taste would very likely be disgusting.

Like seasoning in a meal, a little exposure to Canadian banks can enhance your portfolio. But overdoing it? That could leave a bad aftertaste. Choose wisely.

Buy and Hold Forever: Top Canadian Stocks for Lifetime Returns

What if you could invest once and never worry again?

That’s the power of forever stocks—companies so strong and reliable that you can buy them, hold them for decades, and sleep soundly at night.

Let’s be clear, my selections aren’t based on timing; I’m not saying that they are great buys right now, but rather that I’d buy any of them and that, if I couldn’t monitor them quarterly as I do (and you should too), I wouldn’t worry much.

Forever stocks share several of these qualities:

Diversification
- Forever stocks are companies that diversify to reduce risk by not relying solely on one market or product for revenue.
Market leaders
- Forever stock companies often dominate their industry or market segment, enjoying a significant market share and strong competitive advantages.
Economies of scale
- The average cost per unit decreases as a company produces more products or services.
Predictable cash flow
- Being able to anticipate consistent and steady incoming cash over time reasonably is crucial for a company’s financial health and sustainability.
Stable or sticky business model
- A stable business operates consistently and predictably; it found a formula for generating revenue and maintaining profitability.
- A sticky business, on the other hand, aims for customer loyalty and retention, and repeat business.
Essential products or services
- Selling essentials—food, medical supplies, energy, communication services, transportation, etc.— produces relatively stable demand and revenue stream, as well as repeat business due to customer loyalty and resilience.
Multiple growth vectors
- Growth vectors are paths to expand business, increase revenue, and enhance market presence.
Long dividend growth history
- Yearly increases over decades mean the company ticks the boxes for many of the qualities described earlier.

This list is partial; clearly, other contenders could be on it. I have covered this part more in-depth on The Dividend Guy Blog.

Brookfield Corporation (BN.TO) – Financials

Brookfield skyrocketed with more than 50% return in 2024. I think there is more to come!

Brookfield is amongst the most prominent players in alternative asset management. As the stock market looks overvalued, many investors will turn toward alternative assets 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 capital in its many projects. Therefore, it can double-dip by charging a fee on managed capital and making capital gains when selling assets.

The ONLY List Using the Dividend Triangle

After this first example, you may wonder how I find such high-quality dividend stocks.

I handpick companies with a strong dividend triangle (revenue, earnings, and dividend growth trends) and make sure I understand their business model. While this may seem too simple, two decades of investing have shown me it is reliable.

While many seasoned investors also use these metrics in their analysis, no one has created a list based on them before. This is exactly why I created The Dividend Rock Stars List.

National Bank (NA.TO) – Financials

The bank seems to have done everything right over the past 15 years.

This significant 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).

Note that National Bank (NA.TO) is also a Canadian Dividend Aristocrat.

Dollarama (DOL.TO) – Consumer Discretionary

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 a fantastic alternative for many goods. Dollarama has consistently increased same-store sales and opened new stores.

Introducing many products under its “home brand” increases the company’s margin. DOL introduced a new price point of $5 for many items, adding flexibility and pricing power.

DOL.TO 10-year dividend triangle: Revenue, EPS, and Dividend Growth.

Alimentation Couche-Tard (ATD.TO) – Consumer Staples

I’ve looked at grocery stores, but they don’t seem to 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. The Japanese company is trying all means to stay Japanese. The latest chatter was that the son’s founder would repurchase it 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 ready-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.

Alimentation Couche-Tard (ATD.TO) is another Canadian Dividend Aristocrat part of this list.

Canadian Natural Resources (CNQ.TO) – Energy

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.

This raises 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 slow down 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 precisely what just happened when 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 will go back into hibernation mode, paying a secure dividend. In both scenarios, you can be a winner in the long run.

Waste Connections (WCN.TO) – Industrials

If you are looking for a beast in the industrial sector, you should probably look toward the waste management industry.

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.

I also like the fact that WCN offers a recurring service and is fully integrated. Management has been adept at 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.

WCN.TO 10-year dividend triangle: Revenue, EPS, and Dividend Growth. — DOL.TO 10-year dividend triangle: Revenue, EPS, and Dividend Growth.

CCL Industries (CCL.B.TO) – Materials

Finding an international leader with a well-diversified business based in Canada is rare.

Through the significant acquisition of business units from Avery (the 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 can still generate organic growth (roughly 4-5%) on top of its growth through acquisitions.

Granite (GRT.UN.TO) – Real Estate

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, such as revenue, funds from operations, FFO per unit, payout ratio, and occupancy rate, all look 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. This is among the rare REITs exhibiting AFFO per unit growth while issuing more units to finance growth.

Fortis (FTS.TO) – Utilities

Fortis invested aggressively over the past few years, resulting in solid growth from its core business.

Investors can expect FTS’ revenues to grow as it expands. Bolstered by its Canadian-based businesses, the company has generated sustainable cash flows, leading to four decades of dividend payments.

The company’s five-year capital investment plan is approximately $25 billion between 2024 and 2028, $2.7 billion higher than the previous five-year plan. The increase is driven by organic growth, reflecting regional transmission projects for several business segments. Only 33% of its CAPEX plan will be financed through debt, while 61% will come from cash from operations. Chances are that most of its acquisitions will happen in the U.S.

We also like the company’s goal of increasing its exposure to renewable energy from 2% of its assets in 2019 to 7% in 2035.

FTS.TO 10-year dividend triangle: Revenue, EPS, and Dividend Growth.

Find Other Buy and Hold Forever Stocks: Download the Dividend Rock Stars List

This dividend stock list is updated monthly. You will receive the updated version every month by subscribing to our newsletter. You can download the list by entering your email below.

This isn’t just a list of high-yield stocks—it’s a handpicked selection of Canada’s best dividend growth stocks backed by detailed financial analysis.

✅ Monthly updates
✅ Full dividend safety ratings
✅ 10+ Metrics with filters

Enter your email to get the latest Canadian Dividend Rock Stars List now!

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!

DDM Stock Valuation to Compare Stocks

One of the most debated topics among investors is how to assess the value of a stock. I like to use stock valuation models like the Dividend Discount Model (DDM) to compare similar stocks I have already thoroughly analyzed and find interesting, to see which one might be the best deal.

I don’t use valuation to determine if the company is undervalued or not because, to be honest, your guess is as good as mine. If you put ten financial analysts in a room and ask them to determine the valuation of a company, you’ll likely end up with ten materially different answers.

They’re all smart folks, but each of them has a different perspective. However, using a valuation tool with the same perspective and applying it to two or more companies in the same sector makes it easier to identify which one is the best deal and the best fit with my investment thesis.

To clarify this process, let’s compare two Canadian banks: Royal Bank (RY.TO) and National Bank (NA.TO).

Analyzing RY.TO and NA.TO

Before looking at the fair value of Royal Bank and National Bank as per the DDM, any investor interested in them should analyze both; study their business model, look at their dividend triangle, evaluate the safety and growth potential of their dividend, identify their growth vectors and their risks. For details about what I do to analyze stocks, read this article.

Our diligent investor might summarize the analysis like this:

Business model:

Both RY and NA are regulated and diversified Canadian banks
RY is much larger than NA ($181B market cap vs. $35B)
RY is more distributed geographically than NA, which is heavily concentrated in Quebec

Dividend triangle, dividend safety and growth:

Both banks have a strong dividend triangle showing growth in revenue, EPS, and dividend
NA shows slightly faster dividend growth since early 2022 and higher growth numbers over 5 years for all three metrics
Dividend payout ratios are under control for both, with RY near 45% and NA near 37%

Growth vectors:

RY has diversified revenue streams and is increasing its activities outside Canada
RY targets growth in wealth management, capital markets, and insurance, with this trio already representing over 50% of its revenue
NA follows a growth by acquisition strategy, targets wealth management and capital markets
NA is more flexible and quicker to move due to its smaller size

Risks:

RY capital markets and insurance growth vectors are inclined to variable returns
RY has high exposure to Canadian housing market and the effects of rising mortgage rates
NA is dependent on the Quebec economy, although it has been expanding with private banking in western Canada and investments in emerging markets, such as the ABA bank in Cambodia
NA takes more risks to find growth vectors

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With all this analysis information on hand, our investor still hesitates between Royal Bank and National Bank and now turns to the DDM valuation to compare them.

Comparing NA.TO and RY.TO Valuation

Here is the DDM valuation data for both Royal Bank and National Bank taken from their respective stock cards on the DSR website.

At the time of writing, National Bank was trading at about $103 per share and Royal Bank at around $131.00 per share.

Looking at this data to compare both banks, including the value circled in red for each bank, observe the following:

	RY	NA
DDM Intrinsic value	$190.80	$99.77
Current stock price	$131	$103
Stock currently trading at	45% discount	3% over its value

At 45% discount, RY looks like an amazing deal, a slam dunk, right? It certainly does, but…there is a crucial difference to understand here, which is the discount rate. The discount rate, also known as the “expected return”, represents the minimum acceptable rate of return that an investor expects to earn on their investment to compensate for the risk and opportunity cost of investing in that particular stock.

Compare Apples to Apples

Notice below that the discount rates used for the intrinsic value of RY and NA are not the same. Due to RY’s geographic distribution and revenue stream diversification mentioned earlier, we used a discount rate of 9%, whereas NA’s more audacious approach made us use a 10% rate.

If we compare both banks with the same discount rate of 10%, we see that the difference between the two is significantly reduced.

	RY	NA
DDM Intrinsic value	$143.10	$99.77
Current stock price	$131	$103
Stock currently trading at	9% discount	3% over its value

If you hesitate between RY and NA, a look at the DDM value confirms that your dilemma is between two really good stocks. RY might seem a better deal at current prices, but NA could be a better pick if you want more growth potential and are prepared to live with more volatility in the stock price.

I have both Royal Bank and National Bank in my portfolio because both fit my investment thesis. I appreciate National Bank’s significant growth potential and Royal Bank’s more stable and steady approach. As a reliable source of income that also shows growth vectors, RY.TO is also included in the DSR Canadian retirement portfolio model.