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4 Low-Risk Canadian Stocks with Big Dividends

These 4 low-risk Canadian stocks won’t make you rich overnight, but they will help you sleep well in this bear market - and beyond.

Canada Stock Growth Arrow Bars

The hottest stocks in Canada in recent years have been the cannabis stocks, but they’ve also been extremely volatile—in both directions. Moves of 10% and even 20% are not uncommon. For a lot of investors, that’s just too much risk.

So today I’m looking at safer group of Canadian stocks - stocks with low risk and big dividends. These low-risk Canadian stocks won’t make you rich overnight, but they will let you sleep well, as they all have low volatility and high dependability. Plus, each one has a positive long-term chart, so you can invest in any one of them and expect to come out ahead in the long run.

Low-Risk Canadian Stock #1: Canadian Imperial Bank of Commerce (CM)

One of the big five banks of Canada, Canadian Imperial Bank of Commerce (better known as CIBC) pays a dividend of 5.2%, which is above average for a bank stock. Yet the payout ratio is 43%, so the dividend is well covered by earnings.


The bank is projected to grow sales by 9.5% this year and earnings by 3.2%. Yet the stock’s forward P/E ratio is a modest 8.2.

CIBC is definitely forward-looking. It was the first bank in Canada to release an iPhone banking app (in 2010). It was the first bank in Canada to offer all three leading mobile wallets. And it was the first major Canadian bank to introduce free mobile credit scores for clients. Also, CIBC was one of two banks to earn the highest overall score in The Forrester Banking Wave: Canadian Mobile Apps.

As to the chart, it’s been generally positive since the March 2020 market bottom, running from 25 to new highs above 65 before trading lower and finding support near 48 late last month. I’d wait a week or two to see if the stock can hold support there. If so, and especially if the market can finally get off its knees, this is a great, low-risk Canadian stock to take a flyer on.

CM is a low-risk Canadian stock with big dividends.

Low-Risk Canadian Stock #2: Pembina Pipeline (PBA)

Pembina pays the highest dividend of the group, 5.5%. But you’ve got to sit through some bumps if you hold this stock, given the ups and downs of oil prices.

The company operates over 10,000 kilometers of pipeline across Alberta and British Columbia, moving both natural gas and other petroleum products across the country and into the U.S.

First-quarter results saw 50% growth in both revenues and earnings, as the company got a big boost from skyrocketing energy prices. For the year, analysts anticipate 45% EPS growth on 13% revenue growth.

As to the chart, it is often a slow and steady climber—but not always. After spending 2020 and 2021 recovering from a 60% drop due to the arrival of the pandemic, the stock is up 14% year to date and is just down from hitting pre-pandemic highs.

PBA is a low-risk Canadian stock with big dividends.

Low-Risk Canadian Stock #3: Restaurant Brands (QSR)

The restaurant industry was hit hard by Covid, but the professionals at Restaurant Brands came through only slightly scathed, and primed to grow from here. This plain name owns three of consumers’ favorite fast-food brands: Burger King, Tim Hortons and Popeyes Louisiana Kitchen. All told, its holdings bring in $30 billion in system-wide sales from over 24,000 restaurants in more than 100 countries and U.S. territories.

Burger King is the biggest contributor to the business, accounting for 67% of revenues, but Popeyes, the smallest contributor, is growing the fastest.

In the first quarter, revenues grew to $1.45 billion, while earnings came in at $0.59 per share.

The quarterly dividend is 4.2%.

As for the stock, it’s down 16% this year, so less than the S&P 500, and appears to have bottomed three weeks ago at 46; it’s steadily climbed above 50 since. Trading at 13 times forward earnings with 4.6% EPS growth expected this year and another 11% growth expected next year, QSR is a fairly low-risk Canadian play.

QSR is a low-risk Canadian stock with big dividends.

Low-Risk Canadian Stock #4: Telus Corp (TU)

Telus is one of the major Canadian telecom providers, providing everything from dial-up phone service to internet access to streaming video. (They claim to have the fastest wireless network in Canada.)

Long-term trends are excellent, if slow; the company has grown revenues by single-digit percentages every year of the past decade.

In the first quarter of 2022, revenues grew 5.8% while earnings per share expanded by 16.3%. Looking forward, analysts are expecting earnings growth of 13% this year. The dividend is 4.7%.

As for the stock, it hit all-time highs above 27 a share in April only to come crashing back to earth along with the rest of the market in May and June. It’s currently testing support at 21, a level at which it has repeatedly bounced off of over the course of the last year; plus, the stock is down a mere 7% year to date. The upside may be a bit limited, and it’s not overly cheap at 23 times forward earnings. But trading at the bottom of a year-long range, and given the reliability of its support level, this is a good time to start a small position in TU, collect the nearly 5% dividend, and maybe shares will advance back to their April highs, which would be good for a 28% return.


The Best Stock of the Four

Any one of these Canadian stocks might be a fine long-term holding, but what if you’re more short-term oriented? Pembina Pipeline (PBA) is probably the safest bet in light of escalated oil prices and the fact that energy stocks have been the one truly reliable sector in 2022. If you want to make some decent profits in the back half of this tumultuous year, I’d go with PBA. But all four Canadian stocks are decent buy-low candidates right now - and could be major outperformers if the market can get its act together in the coming months.

Do you own any Canadian stocks? Any Canadian dividend payers that you like? Tell us about them in the comments section below!


*Note: This post has been updated from an original version, published in 2019.

Timothy Lutts is Chairman Emeritus of Cabot Wealth Network, leading a dedicated team of professionals who serve individual investors with high-quality investment advice based on time-tested Cabot systems.