Top 10 Best Performing Canadian Dividend Stocks in 2024

In the investment strategies for 2024, Canadian investors have demonstrated a preference for value stocks over growth stocks, a trend that is particularly evident in market performance.

On September 10th, the Toronto Stock Exchange introduced the 2024 TSX30 Index, which includes approximately 63% of constituent stocks that pay dividends, with an average dividend yield reaching 2.8%. This figure not only significantly exceeds the average levels of previous years but also reflects the growing emphasis on stable cash flow and dividend returns in the market.

This article will provide an in-depth review of the performance of Canada's securities market in the first half of 2024, revealing the stocks that have performed the most outstandingly during this period, with a special focus on the exceptional performance of high-dividend stocks.

How are Canadian dividend stocks performed in 2024

In the first half of the year, the Canadian equity market demonstrated strong resilience and potential, with the S&P/TSX Composite Index recording a growth of approximately 4.38% in the first half of the year. At the same time, although Canadian dividend stocks did not show a strong upward trend in the first half of the year, they exhibited a momentum that was ready to break out. This was mainly reflected in the energy sector, one of the high-dividend segments, which saw a lift from February to April due to the rise in the prices of commodities such as oil. (Referencing the performance of the ETF tracking the S&P/TSX Capped Energy Index in the first half of the year)

Indeed, as the Bank of Canada announced a rate cut in June and followed with three consecutive rate cuts in the following months, Canadian high-dividend stocks also began to excel in the second half of the year. (Referencing the performance of the ETF tracking the S&P/TSX Composite High Dividend Index)

Interest rate cuts, as a significant factor affecting the performance of Canadian dividend stocks, may impact dividend stocks in the following ways:

Enhancing relative attractiveness

When the central bank lowers interest rates, the yields on fixed-income assets such as government bonds and term deposits decline. This means that investors may turn to other investment channels that can provide higher returns. High-dividend stocks, with their higher dividend payout ratios, become one of the alternative options, especially in a low-interest-rate environment, where their attractiveness relative to fixed-income products significantly increases.

Reducing corporate financing costs

For businesses that need to finance capital expenditures or maintain operations through debt, interest rate cuts mean lower borrowing costs. This helps alleviate the financial burden on companies and improves net profit levels. If the savings from these lower costs are used to increase dividend payments or repurchase shares, it further enhances the appeal of high-dividend stocks.

Stimulating economic activity

Central bank interest rate cuts are typically aimed at stimulating economic growth by reducing the cost of borrowing to encourage consumption and investment. With increased economic activity, the sales revenue and profits of many companies may grow. This not only benefits the profitability of companies but also creates conditions for them to continue paying or even increase dividends, thereby indirectly supporting the value of high-dividend stocks.

Top 10 best performing Canadian dividend stocks

In reviewing the market trends of the first half, the question arises whether there are dividend stocks that have exhibited strong performance and are worthy of investor attention and preemptive investment positioning. This analysis, with a cut-off date of June 24th, enumerates the top ten Canadian dividend stocks with market capitalizations surpassing $10 billion that have demonstrated superior performance during the first half of the year, serving as a reference for investors.

Manulife Financial Corp (MFC)

Sector：Financial - Insurance

Manulife Financial Corporation is an international financial services company founded in 1887 and headquartered in Toronto, Canada. Manulife Financial operates in multiple markets globally, including North America, Asia, and Europe, offering services in life insurance, health insurance, retirement plans, and asset management, among other areas. The company is known for its strong brand influence, extensive distribution network, and innovative products and services. As of the end of 2023, it managed approximately CAD 1.05 trillion in assets.

Manulife Financial Corporation has a healthy financial performance, with operating revenues of CAD 12.67 billion in the second quarter of this year, a year-on-year increase of 6.57%; net profit was CAD 1.132 billion, achieving sequential growth.

ARC Resources Ltd (ARX)

Sector：Energy - Oil & Gas

ARC Resources is a company focused on the exploration and production of oil and natural gas in the Western Canadian Sedimentary Basin, headquartered in Calgary, Alberta, Canada. Its primary operations concentrate on the development and management of oil and gas fields, with a commitment to enhancing production efficiency through technological innovation and effective management, while also emphasizing environmental protection and social responsibility to achieve sustainable development.

Financially, ARC Resources reported operating revenues of CAD 1.279 billion in the second quarter, a year-on-year decrease of 4.93%; net profit was CAD 240 million, down 14.13% year-on-year. Although there was a decline compared to the previous year, the figures showed an increase on a sequential basis.

Imperial Oil Ltd (IMO)

Sector：Energy - Oil & Gas

Imperial Oil is one of Canada's largest integrated oil companies, affiliated with the American Exxon Mobil, and headquartered in Toronto, Canada. The company's operations span all stages of the petroleum industry, including the exploration, production, transportation, and marketing of crude oil and natural gas. Additionally, the company possesses extensive oil and natural gas assets in Canada and has a wealth of experience and advanced technology in the field of oil sand extraction.

Imperial Oil boasts a healthy financial status, with stable operating revenues over multiple quarters. In the second quarter of this year, the company reported operating revenues of CAD 13.348 billion, a year-on-year increase of 13.46%; and achieved a net profit of CAD 1.133 billion, a year-on-year increase of 67.85%.

Suncor Energy Inc (SU)

Sector：Energy - Oil & Gas

Suncor Energy is an integrated energy company headquartered in Calgary, Alberta, Canada. Its main business includes oil sands mining, exploration and production of petroleum and natural gas, refining, and marketing of refined petroleum products. The company also has involvement in the renewable energy sector. Suncor Energy is an industry leader in oil sands mining technology.

In the second quarter of this year, Suncor Energy reported operating revenues of CAD 8.057 billion, an increase of 10.8% compared to the same period last year; and achieved net profit of CAD 1.568 billion.

Cenovus Energy Inc (CVE)

Sector：Energy - Oil & Gas

Cenovus Energy is an energy company headquartered in Calgary, Canada, focusing on the exploration and production of oil and natural gas. In addition to traditional oil and gas field development, Cenovus also specializes in oil sands extraction. The company has upstream projects in Canada and downstream operations such as refining in both Canada and the United States. It is worth mentioning that Cenovus Energy is committed to developing natural resources responsibly and has a clear commitment to environmental protection and social responsibility.

Financially, the company has seen an increasing trend in revenues this year. In the second quarter, the revenues were CAD 14.885 billion, a year-on-year increase of 21.70%; net profit was CAD 1 billion , a year-on-year increase of 15.47%.

Canadian Natural Resources Ltd (CNQ)

Sector：Energy - Oil & Gas

Canadian Natural Resources is a large independent energy production company headquartered in Calgary, Alberta, Canada. The company's business spans North America, the North Sea of the UK, and several other countries, focusing primarily on the exploration, development, and production of oil and natural gas, as well as natural gas processing and pipeline transportation. The majority of the company's revenue comes from North America.

The company's financial performance in the second quarter of this year was good, with both revenue and net profit increasing year-on-year and quarter-on-quarter. Operating revenues were CAD 10.622 billion , a year-on-year increase of 20.08%; net profit was CAD 1.715 billion, a year-on-year increase of 17.22%.

Pembina Pipeline Corp (PPL)

Sector：Energy - Oil & Gas

Pembina Pipeline, headquartered in Calgary, Canada, is a company specializing in oil and natural gas transportation services. With an extensive network of pipelines, Pembina Pipeline is also involved in storage, Steam Assisted Gravity Drainage (SAGD), and other energy-related infrastructure construction and services. As a company with rich experience in the field of energy transportation, Pembina Pipeline is committed to supporting the operation of the energy industry through efficient and reliable services.

This year, the company has shown a healthy financial performance, with operating revenues of CAD 1.855 billion, a year-on-year increase of 30.45%, and a net profit of CAD 479 million, a year-on-year increase of 31.96%.

Saputo Inc (SAP)

Sector：Consumer Packaged Goods

Saputo is a global dairy manufacturer headquartered in Montreal, Canada. The company primarily produces and distributes products such as cheese, butter, yogurt, milk, and milk powder to various countries and regions. North America is an important source of its revenue, and Saputo is known for its high-quality products and extensive market distribution, holding a significant position in the dairy industry.

In the second quarter of this year, Saputo reported operating revenues of CAD 4.606 billion, a year-on-year increase of 9.48%; and achieved a net profit of CAD 142 million, a year-on-year increase of 0.71%.

Royal Bank of Canada (RY)

Sector：Financial - Banks

Royal Bank of Canada is one of Canada's largest banks, headquartered in Toronto. It provides a comprehensive range of financial services, including personal and commercial banking, wealth management, asset management, and capital market services. As a global financial institution, Royal Bank of Canada has branches and service networks worldwide, and its solid financial position and extensive business coverage make it one of the top choices for investors.

In the second quarter of this year, the company's operating revenues were CAD 14.631 billion, a year-on-year increase of 12.75%; net profit was CAD 4.486 billion, a year-on-year increase of 16.22%.

Brookfield Renewable Corp (BEPC)

Sector：Utilities - Independent Power Producers

Brookfield Renewable is a company focused on renewable energy, headquartered in Canada, and is one of the largest investors in renewable energy globally. The company is involved in the development, ownership, and operation of hydroelectric, wind, solar, and other renewable resources. Its investment regions include North America, South America, Europe, Asia, and Africa. As of now, the company has nearly 34,000 megawatts of generating capacity.

In the second quarter of this year, the company reported operating revenues of USD 989 million, a year-on-year increase of 9.77%. However, due to a significant increase in non-operating expenses, the quarter resulted in a net loss.

Final words

Finally, investors should note that any investment comes with certain risks, and the global economic environment still has uncertainties that may affect the company's future performance and dividend payment capabilities. Therefore, when choosing investment targets, investors should make prudent decisions based on their own risk tolerance and investment objectives. This article aims to review the market conditions in the first half of the year, and investors should obtain the latest market information to make judgments when making investment decisions.