Canadian Dividend Stocks I Bought in the Last Three Months

In the last three months, it would have cost Canadians 28% to 34% more to convert Canadian dollars to U.S. dollars. Today, it costs around 30% more still. That’s why in the past three months, I bought Canadian dividend stocks instead of U.S. dividend stocks. Specifically, I bought shares in these Canadian dividend stocks that are still priced at a good value today.

Canadian Dividend Stocks for a Solid Portfolio: Banks

The big five Canadian banks are known for their solid performance in the last recession. During the financial crisis, they managed to keep a strong position, and maintained their dividends.

In the last three months, I managed to buy some shares in two of the big five Canadian banks, Toronto-Dominion Bank (TSX:TD)(NYSE:TD) and Bank of Nova Scotia (TSX:BNS)(NYSE:BNS). They’re the second and third largest banks in Canada.

Toronto-Dominion Bank hadividendss a meaningful presence in the United States. In 2014, 21% of its earnings were from the U.S.

Whenever it reaches a 4% yield or higher, it’s a good buy. Today, Toronto-Dominion Bank costs $53 per share with a 3.9% yield.

Based on a historical normal multiple of 12.6, the shares should trade  closer to $58. So, the bank shares are slightly undervalued with roughly an 8% discount.

Bank of Nova Scotia is an international bank with operations in North America, Latin America, the Caribbean and Central America, and parts of Asia. Around $60 today, it yields 4.6%. Typically, when it yields 4.5% or higher, it’s a good buy. Based on a historical normal multiple of 12.4, it should trade closer to $70. So, the bank shares has a margin of safety of over 14%.

Today, Bank of Nova Scotia stands out from the two because it is cheaper and has a higher yield.

Canadian Dividend Stocks with Stable Cash Flows: Energy Infrastructure Businesses

Enbridge Inc (TSX:ENB)(NYSE:ENB) and TransCanada Corporation (TSX:TRP)(NYSE:TRP) are the leading companies in the energy infrastructure business. Compared to other energy companies such as the producers, explorers, and drillers, their businesses are more stable and less reliant on the underlying commodity prices. So, their dividends are safer due to earning mostly predictable cash flows.

Both Enbridge and TransCanada plan to invest at least $38 billion in projects in the next three to five years. Enbridge anticipates the growth to drive dividend growth of 14 to 16% per year, while TransCanada anticipates dividend growth of 8 to 10% each year.

If you’re looking to get more income today, you should consider TransCanada that has a yield of 4.6%. In terms of growth, or implied price appreciation, Enbridge is the clear winner, even though it only yields 3.3%.

In Conclusion

In my opinion, the best opportunities of Canadian dividend stocks from the above list is Enbridge and Bank of Nova Scotia. They are in diversified businesses and are the best valued stocks of the group. Any further dips are greater opportunities to buy.

Did you buy any Canadian dividend stocks recently? How about U.S. dividend stocks?

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Disclosure: At the time of writing, I am long TD, BNS, ENB, and TRP.

Disclaimer: I am not a certified financial advisor. This article is for educational purposes, so consult a financial advisor and or tax professional if necessary before making any investment decisions.

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