Dividend-growth stocks can be good long-term bets for beginner investors who are going to reinvest their dividend or distribution payments anyway. Indeed, there's nothing wrong with going after some of the higher-yielding dividend names out there.
That said, some of the market's best dividend-growth stocks seem intriguing at these levels, especially as interest rates continue to fall from here.
Undoubtedly, a falling-rate climate can be seen as a bit of a rising tide that lifts most boats (think stocks and real estate investment trusts, or REITs) on the TSX Index or S&P 500. And while many stocks have already risen quite a bit after the latest round of cuts from the Bank of Canada, I still think the rate hikes to come could act as rally fuel for a stock market that may be ready to keep on moving higher.
So, if you're looking to ride on the back of this bull market, the following dividend growers seem worth checking out, whether you're a young, new investor or a new retiree who's looking for a bit more than hefty dividend yields.
CN Rail
CN Rail (TSX:CNR) stock stands out as a long-term core holding that's perfect for Canadian investors of all ages. If you're a new retiree who's looking for a solid upfront yield (just north of 2%) and above-average annual dividend growth, it's tough to look past the $100 billion railway firm. Though the TSX Index may be at a fresh new high, CN Rail has fluctuated wildly. Now down over 11%, CNR stock goes for a very modest 18.8 times trailing price to earnings (P/E).
Though some may argue that the long-time rail titan has lost its market-beating edge—the stock has gained a mere 33% in the past five years—after enduring a slew of industry and macro headwinds, I'd argue that the firm has numerous means to chug higher as rates fall and demand for intermodal freight looks to stay robust. As I've noted in prior pieces, CN Rail isn't running as efficiently as it could be.
Should the stock keep dragging its feet in the coming year, I'd look for the firm to consider adding an industry veteran to upper management. With such exceptional assets and so much untapped potential, CN Rail could really use a catalyst. Bringing a seasoned rail veteran may very well be the missing piece to the puzzle that is CN Rail.
Despite the headwinds, CNR has grown its dividend by well over 10% annually in the past five years. That's impressive.
Restaurant Brands International
Restaurant Brands International (TSX:QSR) is a quick-serve restaurant company that could regain its market-beating edge as past investment efforts finally look to pay off in a big-time way. Indeed, the company has been investing in its fast-food brands to jolt consumer visits and make some market share gains over rivals amid the inflationary hailstorm.
Now that the worst of inflation is over, with the Bank of Canada and Fed slashing rates, the real question is whether Restaurant Brands can continue to court consumers with tasty food and even tastier deals. I think it can. Either way, QSR shares are too cheap at 17.5 times trailing P/E with a generous 3.32% dividend yield.
Like CN Rail, Restaurant Brands has a history of dividend hikes (averaging around 4% in the past five years), though not nearly as generous as CN Rail.
