3 Canadian Dividend Stocks That Make It Rain Cash

The Toronto Stock Exchange (TSX) is home to plenty of dividend stocks with fat yields and high-income potential. Thanks to consistent dividend increases and lukewarm returns, Canada’s top stocks are gushing with yield. Not all TSX stocks are necessarily ultra-high yielders, but there are a good few that are. In this article, I’ll explore three TSX  dividend stocks that positively make it rain cash.


Enbridge (TSX:ENB)(NYSE:ENB) is a Canadian energy stock that yields 6.9% at today’s prices. The high yield is due to the fact that, over the last five years, ENB has experienced the rare combination of low capital gains and high dividend growth. Since July 2016, ENB’s dividend has grown by 9% CAGR, yet its stock has actually fallen. The end result of that has been a very, very high yield.

How sustainable is that yield? Well, based on GAAP earnings, the payout ratio is above 100%. That would tend to suggest that the dividend is not very sustainable. However, cash flow tells a different story. Going by distributable cash flow (DCF)–the metric ENB uses to evaluate its own dividend-paying ability–the payout ratio is a mere 72%.

That’s totally sustainable. And using DCF instead of earnings is perfectly valid because cash flow better represents dividend-paying ability than earnings, which are influenced by non-cash factors.

Canadian Imperial Bank of Commerce

The Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) is a Canadian bank stock that currently yields 4.14%. Most Canadian banks used to have yields in that range, but many of them dipped into 3% territory after a rally this year. CM is the one holdout. It also rallied, but its yield remained high because it was pushing 6% before the start of the year.

Is CM a good stock apart from the dividend?

Well, it has underperformed the TSX banking sub-index for the better part of a decade. And as a domestic-oriented bank, it doesn’t have as much growth potential as some of the other Big Six banks do. But it’s got a high yield and a track record of modest dividend growth. Perhaps if you bought it just for the cash stream and nothing else, it would be a worthy play. Just don’t expect a superior total return.

Suncor Energy

Suncor Energy (TSX:SU)(NYSE:SU) is a Canadian energy stock that yields 3.25%. While that doesn’t sound like a super high yield, looks can be deceiving. In response to the COVID-19 pandemic, Suncor Energy slashed its dividend in half, from $0.42 to $0.21.

That cut the yield right down to size. But the dividend could easily be reinstated. This year we’ve seen oil prices mostly rally, going as high as US$75. In the past week, they’ve fallen a bit, but they’re probably not going back to 2020 lows. With oil prices above $70,

Suncor could easily reinstate its dividend at $0.42. If it does, then its yield (at today’s stock price) will balloon to 6.5%. That puts us in Enbridge territory, and all it takes is for oil prices to remain relatively strong for the remainder of this year.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Andrew Button has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Enbridge.

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