Dividend-paying stocks that combine healthy balance sheets with hefty yields can provide investors with steady incomes, cushion against market downturns, and grow investments at a healthy clip.
In the first quarter of 2024, the top-performing dividend-payers included copper company Lundin Mining LUN, oil and gas exploration and production company Peyto Exploration & Development PEY, and oil and gas exploration and production company Tamarack Valley Energy TVE.
To find the quarter's 10 best-performing income-focused stocks, we screened the Morningstar Canada Index—which measures the performance of Canada's broad regional markets, targeting the top 97% of stocks by market capitalization—for companies with a forward dividend yield of at least 1.5%, excluding real estate investment trusts.
The Best-Performing Canadian Dividend Stocks of Q1 2024
- Lundin Mining LUN
- Peyto Exploration & Development PEY
- Tamarack Valley Energy TVE
- Leon's Furniture LNF
- Tricon Residential TCN
- Imperial Oil IMO
- Headwater Exploration HWX
- Primo Water Corp PRMW
- Arc Resources ARX
- Cenovus Energy CVE
How Have Dividend Stocks Performed?
Over the past quarter, the Morningstar Canada Dividend Growth Index, which tracks the performance of Canadian stocks with a history of uninterrupted dividend growth and the capacity to sustain that growth, rose 5.9%. The Morningstar Canada Dividend Yield Focus Index, which tracks the performance of high-quality, dividend-paying Canadian stocks, rose 2.6%. In the 12 months leading up to March 31, the dividend growth index gained 12.6% and the dividend yield focus index gained 3.7%.
The overall Canadian stock market, as measured by the Morningstar Canada Index, has gained 7% on the quarter and 15% on the year.
Yields and Metrics for Q1's Best-Performing Dividend Stocks
Lundin Mining
Copper company Lundin Mining rose 28.7% in the first quarter and gained 54.9% over the past 12 months. Trading at C$13.86 per share, its stock has a forward dividend yield of 2.6%. Lundin Mining pays investors an annual dividend of C$0.36 per share. The stock, which has no economic moat, is currently trading near its quantitative fair value estimate of C$15.13 per share, leaving it with a quantitative Morningstar Rating of 3 stars.
Peyto Exploration & Development
Oil and gas exploration and production company Peyto Exploration & Development rose 26.7% in the first quarter and gained 34.2% over the past 12 months. At C$14.93 per share, its stock has a forward dividend yield of 8.84% and an annual dividend of C$0.44 per share. The stock, which has no economic moat, is moderately undervalued, trading 11% below its quantitative fair value estimate of C$16.79 per share. It has a quantitative Morningstar Rating of 4 stars.
Tamarack Valley Energy
Oil and gas exploration and production company Tamarack Valley Energy gained 26.3% in the first quarter and rose 1% over the past 12 months. The stock's C$3.84 price gives it a forward dividend yield of 3.91%. Tamarack Valley Energy pays investors an annual dividend of C$0.05 per share. With a quantitative fair value estimate of C$4.80 per share and no economic moat, the stock is moderately undervalued, trading at a 20% discount. It has a quantitative Morningstar Rating of 4 stars.
Leon's Furniture
Specialty retail firm Leon's Furniture rose 25.4% in the first quarter and gained 34.7% over the past 12 months. Trading at C$22.59 per share, Leon's Furniture stock has a forward dividend yield of 3.19% and an annual dividend of C$0.72 per share. The stock, which has no economic moat, is moderately undervalued, trading 14% below its quantitative fair value estimate of C$26.23 per share. It has a quantitative Morningstar Rating of 4 stars.
Tricon Residential
Real estate company Tricon Residential gained 25.2% in the first quarter and rose 46.3% over the past 12 months. Trading at C$15.10 per share, its forward dividend yield is 2.06%. Tricon Residential pays investors C$0.31 per share annually. The stock, which has no economic moat, is trading at a 26% discount to its quantitative fair value estimate of C$20.52 per share, leaving it moderately undervalued. It has a quantitative Morningstar Rating of 4 stars.
Imperial Oil
Oil and gas firm Imperial Oil gained 24.6% in the first quarter and rose 39% over the past 12 months. At C$93.43 per share, Imperial Oil stock has a forward dividend yield of 2.57% and an annual dividend of C$2.40 per share. The stock, which has no economic moat, is trading near its quantitative fair value estimate of C$86.34 per share. It has a quantitative Morningstar Rating of 3 stars.
Headwater Exploration
Oil and gas exploration and production company Headwater Exploration rose 24.3% in the first quarter and gained 27.9% over the past 12 months. Trading at C$7.67 per share, Headwater Exploration stock has a forward dividend yield of 5.22% and an annual dividend of C$0.40 per share. The stock, which has a narrow economic moat, is trading near its quantitative fair value estimate of C$7.79 per share. It has a quantitative Morningstar Rating of 3 stars.
Primo Water Corp
Non-alcoholic beverages company Primo Water Corp rose 24.2% in the first quarter and gained 21% over the past 12 months. Trading at C$24.66 per share, Primo Water Corp stock has a forward dividend yield of 1.99% and pays investors an annual dividend of C$0.49 per share. The stock, which has no economic moat, is currently trading near its fair value estimate of C$24.39 per share, leaving it with a Morningstar Rating of 3 stars.
Arc Resources
Oil and gas exploration and production company Arc Resources gained 23.6% in the first quarter and rose 62% over the past 12 months. The stock's C$24.15 price gives it a forward dividend yield of 2.82%. Arc Resources pays investors an annual dividend of C$0.68 per share. With a quantitative fair value estimate of C$23.29 per share and no economic moat, the stock is fairly valued and has a quantitative Morningstar Rating of 3 stars.
Cenovus Energy
Oil and gas firm Cenovus Energy rose 23.3% in the first quarter and gained 17.2% over the past 12 months. At C$27.08 per share, Cenovus Energy has a forward dividend yield of 2.07% and an annual dividend of C$0.56 per share. The stock, which has no economic moat, is trading near its quantitative fair value estimate of C$30.40 per share. It has a quantitative Morningstar Rating of 3 stars.
What Is the Morningstar Canada Index?
The Morningstar Canada Index measures the performance of Canada's broad regional markets, targeting the top 97% of stocks by market capitalization. The index does not incorporate environmental, social, or governance criteria.
What Is the Morningstar Canada Dividend Yield Focus Index?
The Morningstar Canada Dividend Yield Focus Index captures the performance of a portfolio of high-quality, dividend-paying securities.
It's a subset of the Morningstar Canada Index (which represents 97% of the equity market capitalization) that includes only stocks that pay dividends. The stocks are screened for economic moat and financial strength compared to others in their sector. Real estate investment trusts are excluded.
The 25 highest-yielding stocks are included in the index, weighted by the dollar value of the dividends. See the full rulebook here.
The Best Dividend Stock Leaders: More Ideas to Consider
Investors who would like to find more top-performing or cheap dividend stocks can do the following:
- Review the full list of stocks in the Morningstar Canada Dividend Yield Focus Index. Stocks with Morningstar Ratings of 4 or 5 stars are undervalued, according to our metrics.
- Use our Morningstar Stock Screener tool to find the best dividend stocks according to your specific criteria. You can search for stocks based on their dividend yields, valuation measures like price/earnings ratios, and more.
When it comes to buying stocks, it’s more than just dividends. Read here how valuations and competitive advantages—known as economic moats—matter when it comes to a stock’s potential for outperformance.
Companies that are not formally covered by a Morningstar analyst have quantitative ratings. These companies are statistically matched to analyst-rated companies, allowing our models to calculate a quantitative moat, fair value, and uncertainty rating.
This article was compiled by Bella Albrecht, edited by Lauren Solberg, and reviewed by Andrew Willis.
As part of our mission to put more information into the hands of investors, this article was compiled from Morningstar’s data and independent research using automation technology. The original article was written by Morningstar reporters and editors. This updated version was reviewed by an editor.
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