Canada’s best dividend stocks for 2023

A family looking at the "best dividend stocks in Canada" and are pretty excited.

The best dividend stocks for 2023: Can we look to last year’s best-paying stocks? 

After coming through what felt like the Red Wedding of 2022, to liken it to a Game of Thrones plot, this year many investors would be inclined to patiently cash out of the markets, but inflation is eroding purchasing power for Canadians, and putting their savings in a basic savings account will put them even further behind. It’s counterintuitive during these times to continue investing in assets that will help protect your purchasing power.

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Dividend stocks can provide some level of predictable income to buffer market volatility, but there’s no guarantee. For example, last year, the iShares S&P/TSX Canadian Dividend Aristocrats Index ETF and Vanguard FTSE Canadian High Dividend Yield Index ETF were down 8.09% and 4.3%, respectively. And that’s marginally better than the broader S&P/TSX Composite Index, which posted a 8.5% loss in 2022. It appears more volatility will come in 2023.

The recent aggressive interest rate hikes by central banks around the world (even historically dovish Japan moved the needle upward on interest rates) created inverted yield curves, which typically have been good indicators of impending recessions. 

The “people” part of the People’s Republic of China had enough of COVID lockdowns and began questioning how the pandemic was playing out beyond their borders, especially after watching the maskless fans cheer on World Cup matches. (That led to censorship of the stadium stands.) Following widespread protests, China rolled back COVID restrictions in December. The country is now experiencing a health crisis that could have major economic effects globally. While Wall Street and Bay Street analysts are pounding the table for lower interest rates in a bid to stave off the calamity, it’s possible that inflation will remain sticky. 

But dividend-paying stocks still have a place in many Canadians’ portfolios. For a critical mass of investors, building exposure to stocks paying increasing dividends over a long period of time is still a solid investment strategy. And paying stocks still have a purpose in 2023.

Top 100 dividend stocks for 2023

This year will bring an investing environment Canadians haven’t seen since prior to the “great financial crisis” of 2007/08: options for high-yielding fixed-income investments. With interest rates near zero for most of the past 15 years, options for yield have been extremely limited, forcing investors to take on more risk than they are comfortable with to achieve decent growth in their savings. With interest rates rising, traditional savings vehicles (like guaranteed investment certificates, a.k.a. GICs) have become more palatable. And, after years of leading a lifestyle based on “fear of missing out” (a.k.a. FOMO), Canadian investors can now choose from more investment vehicles that are aligned with their personal risk profiles and value systems.

Dividend-paying stocks are an option if you are seeking a stable stream of income and the potential for capital growth in your portfolio. If you invest in the right dividend-paying stocks, you can get the best of both. However, finding those stocks is the challenge.

One of the misconceptions about dividend stocks is that they are immune to the fluctuations of the broader stock market. The truth is: Far from it. Stocks are stocks are stocks, even ones paying dividends. You’re just as likely to lose money owning a dividend-paying stock as you are owning a non-dividend-paying growth stock.


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