Why it’s the Right Time for Canadian Investors to Buy Dividend Stocks

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The Canadian stock market has seen a bumpy ride in 2022 so far. After rising in the previous two quarters, the TSX composite index plunged 13.8% in the second quarter (Q2), marking the worst quarterly losses since the start of the COVID-19 pandemic. While the third quarter started on a positive note, with Canada’s leading market benchmark recovering 4.4% in July, continuing macroeconomic uncertainties kept investors on edge in August.

With this, the TSX Composite is trading at losses of 8.1% year to date at the time of writing. While traders tend to flee riskier assets when the stock market falls, I find it a rare opportunity for long-term investors to buy some quality dividend stocks. Before we highlight one of the best dividend stocks in Canada to buy now, let me explain why it may be a good time for investors to consider buying high dividend stocks.

Because it is the right time to invest in dividend stocks

It is important to note that metals mining and energy stocks form an important part of the TSX Composite Index. This is why the commodity-rich TSX index tends to outperform its peer indices in the US market when commodity prices start to rise and vice versa. Interestingly, most of the large and established companies in the oil, gas and mining sectors also reward their investors with high dividends in Canada.

As high inflation, rapidly rising interest rates and a recent rise in geopolitical tensions raised the possibility of a looming moderate recession over the past couple of months, investors began dumping commodities, triggering a price correction. crude oil and metals. This recent weakness in commodity prices has also led to a correction in some commodity-related stocks that pay fundamentally healthy dividends.

Because a company’s dividend yield is tied to its share price, the yields of some high dividend stocks in Canada have increased dramatically in recent times. If long-term investors invest their hard-earned savings in such dividend stock during the ongoing correction, they have a rare chance of locking in a high dividend yield, which could help them earn reliable passive income for as long as they want. That said, I would now like to quickly highlight one of the best Canadian dividend stocks that I feel is worth considering right now.

The best Canadian stock dividend to buy now

The Canadian energy company Enbridge (TSX: ENB) (NYSE: ENB) could be one of these big dividends for long-term Canadian investors to consider right now. The company has a market capitalization of $ 113.8 billion, as its stock is trading at $ 55.86 per share at the time of writing, with about 13% year-to-date earnings. Despite its solid fundamentals, the stock has seen a nearly 6% erosion in value over the past three months.

After struggling with the global energy sector challenges driven by the pandemic in 2020, Enbridge experienced a solid financial recovery in 2021. Last year, Enbridge recorded a 20.4% year-over-year (year-over-year) increase in its total revenue to $ 47.1 billion, while its adjusted earnings for the year increased 13.2% to $ 2.74 per share. Street analysts predict that the energy company’s positive earnings growth trend will continue into the current year with an expected year-over-year growth of more than 6% for the full year of 2022. Also, after the recent price correction of the shares, this Enbridge currently has an attractive dividend yield of around 6.2%.

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