2 Canadian Dividend Stocks I’d Buy for Stability and Growth

By Joey Frenette at The Motley Fool Canada

For investors seeking stability and growth, there’s no shortage of opportunities here on the TSX Index. Of course, more growth and capital appreciation potential often comes with the cost of heftier amounts of volatility. But you don’t need to take a ride on a steep roller-coaster that doesn’t agree with your stomach to get a shot at outsized results over time.

And, in this piece, we’ll check out a pair of dividend payers that I think offer a great balance of appreciation, dividends, dividend growth, and a slightly lower beta (which entails less correlation to the broad Canadian stock market).

Of course, the most important factor of them all is value. And while the following names range from mildly discounted to fully valued, I still think the two stocks are worth buying and watching as we head into the second half of the year.

CN Rail

CN Rail (TSX:CNR) is actually climbing higher after spending some years in the penalty box over industry headwinds. The stock is now up more than 20% year to date, and the momentum might not be so quick to fade, especially as volumes stay robust while the company looks to execute on efforts to improve upon that operating ratio.

Indeed, it wasn’t too long ago that CN Rail was one of the most efficient operators out there. And while recent results have left a bit to be desired, I do think that there’s upside if management can drive down costs, jolting margins, all while loads look to march higher. It’s been a tough couple of years, but I think the railway’s comeback is the real deal.

With a nice 2.2% dividend yield and a very long history of generously raising the payout each and every year, I’d not sleep on the name at just shy of 22 times trailing price-to-earnings (P/E). It’s a fairly valued stock, but with plenty of momentum and fading headwinds, perhaps it’s a timely buy before the yield falls below that 2% mark. With a 0.99 beta, shares are about as volatile as the rest of the market.

TC Energy

TC Energy (TSX:TRP) has been a fantastic performer so far this year, now up around 25% year to date. Unlike CN Rail, which is making up for lost time, TC Energy shares are continually making higher highs. And while shares seem frothy at 28.3 times trailing P/E, I’d actually argue that the multiple is in the right place, especially given the expansion projects on the way and strong AI-driven demand for natural gas.

The 3.7% dividend yield is small for TC Energy, but it’s still a terrific payout that I think has more room for growth, especially as new projects start adding to the already generous amounts of cash flows coming in.

With a market cap just shy of $100 billion, I think it’s time to give the pipeline a second look, as it looks to continue its parabolic move, which began in the back half of 2024. Finally, the 0.97 beta makes the stock about as volatile as the TSX Index, maybe a hair less.

The post 2 Canadian Dividend Stocks I’d Buy for Stability and Growth appeared first on The Motley Fool Canada.

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Fool contributor Joey Frenette has positions in Canadian National Railway. The Motley Fool recommends Canadian National Railway. The Motley Fool has a disclosure policy.

2026