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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 August 2024, the top-performing dividend-payers included independent power producer TransAlta TA, gold company Lundin Gold LUG, and gold company Dundee Precious Metals DPM.
To find the month’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 August 2024
1. TransAlta TA
2. Lundin Gold LUG
3. Dundee Precious Metals DPM
4. iA Financial Group IAG
5. Quebecor QBR.B
6. Canadian Imperial Bank of Commerce CM
7. American Apparel GIL
8. Canadian Tire Corporation CTC.A
9. Sun Life Financial SLF
10. Great-West Lifeco GWO
How Have Dividend Stocks Performed? Over the past month, 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 1.4%. The Morningstar Canada Dividend Yield Focus Index, which tracks the performance of high-quality, dividend-paying Canadian stocks, rose 2.1%. In the 12 months leading up to Aug. 31, the dividend growth index gained 22.4% and the dividend yield focus index gained 13.9%.
The overall Canadian stock market,
as measured by the Morningstar Canada Index, has gained 1.2% on the month and 19.6% on the year.
Yields and Metrics for August’s Best-Performing Dividend Stocks
TransAlta
Independent power producer TransAlta rose 14.7% in August and lost 6.7% over the past 12 months. Trading at C$11.87 per share, its stock has a forward dividend yield of 2.02%. TransAlta pays investors an annual dividend of C$0.24 per share. The stock has a quantitative Morningstar Rating of 3 stars.
Lundin Gold
Gold company Lundin Gold rose 13.3% in August and gained 70.5% over the past 12 months. At C$27.07 per share, its stock has a forward dividend yield of 4.07% and an annual dividend of C$1.10 per share. It has a quantitative Morningstar Rating of 2 stars.
Dundee Precious Metals
Gold company Dundee Precious Metals gained 12.5% in August and rose 53.0% over the past 12 months. The stock’s C$13.13 price gives it a forward dividend yield of 1.68%. Dundee Precious Metals pays investors an annual dividend of C$0.22 per share. The stock has a quantitative Morningstar Rating of 3 stars.
iA Financial Group
Diversified insurance firm iA Financial Group rose 11.8% in August and gained 26.0% over the past 12 months. Trading at C$103.58 per share, iA Financial Group stock has a forward dividend yield of 3.17% and an annual dividend of C$3.28 per share. It has a quantitative Morningstar Rating of 3 stars.
Quebecor
Telecom services firm Quebecor gained 10.8% in August and rose 12.5% over the past 12 months. Trading at C$33.47 per share, its forward dividend yield is 3.88%. Quebecor pays investors an annual dividend of C$1.30 per share. The stock, which has a narrow economic moat, is trading at a 16% discount to its fair value estimate of C$40 per share, leaving it moderately undervalued. It has a Morningstar Rating of 4 stars.
Canadian Imperial Bank of Commerce
Diversified bank Canadian Imperial Bank of Commerce gained 10.3% in August and rose 53.8% over the past 12 months. At C$78.76 per share, Canadian Imperial Bank of Commerce stock has a forward dividend yield of 4.57% and an annual dividend of C$3.60 per share. The stock, which has a narrow economic moat, is moderately overvalued, trading 13% above its fair value estimate of C$70 per share. It has a Morningstar Rating of 2 stars.
American Apparel
Apparel manufacturing company American Apparel rose 9.7% in August and gained 55.1% over the past 12 months. Trading at C$61.42 per share, American Apparel stock has a forward dividend yield of 1.82% and an annual dividend of C$1.12 per share. The stock, which has a narrow economic moat, is trading near its fair value estimate of C$65 per share. It has a Morningstar Rating of 3 stars.
Canadian Tire Corporation
Specialty retail firm Canadian Tire Corporation rose 8.4% in August and ended the past 12 months near zero. Trading at C$153.64 per share, Canadian Tire Corporation stock has a forward dividend yield of 4.56% and pays investors an annual dividend of C$7 per share. The stock, which has no economic moat, is currently trading near its fair value estimate of C$153 per share, leaving it with a Morningstar Rating of 3 stars.
Sun Life Financial
Diversified insurance firm Sun Life Financial gained 8.4% in August and rose 16.3% over the past 12 months. The stock’s C$73.46 price gives it a forward dividend yield of 4.41%. Sun Life Financial pays investors an annual dividend of C$3.24 per share. With a fair value estimate of C$66 per share and no economic moat, the stock is fairly valued and has a Morningstar Rating of 3 stars.
Great-West Lifeco
Life insurance company Great-West Lifeco rose 8.2% in August and gained 19.7% over the past 12 months. At C$44.30 per share, Great-West Lifeco has a forward dividend yield of 5.01% and an annual dividend of C$2.22 per share. The stock, which has no economic moat, is trading near its fair value estimate of C$41 per share. It has a 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.
• Watch this video to learn how Morningstar uses the star rating, moat rating and other metrics to evaluate stocks.
Companies that are not formally covered by a Morningstar analyst are statistically matched to analyst-rated companies, allowing our models to calculate a quantitative star rating.
This article was compiled by Bella Albrecht, edited by Lauren Solberg, and reviewed by Andrew Willis.
This article was generated with the help of automation and reviewed by Morningstar editors.
