5 of the Best Canadian Dividend Stocks

As Morningstar’s Dan Lefkovitz discusses in his recent article about the weakening of the US dollar relative to most other developed-market currencies, international stocks have outperformed US stocks in 2025. That trend includes Canada. Through Oct. 31, the S&P/TSX index (which represents approximately 70% of the market capitalization of the Toronto Stock Exchange) returned 25.1% in Canadian dollars (and 28.4% in US dollars), while the Morningstar US Market Index returned 17.1%.

Another effect of a weakening dollar is that dividends paid in Canadian dollars receive a slight bump when a payment is exchanged into US dollars for US investors. However, some Canadian companies actually declare and pay their dividends in US dollars, and for those that don’t, yields could remain flat because of share price appreciation. Also, while the US dollar has recovered somewhat from its summer lows relative to the Canadian dollar, it’s still down 2.2% for 2025. Yet, even if the yields of Canadian dividend stocks were up across the board, that alone wouldn’t be reason enough to purchase them. But I was curious to explore the Canadian dividend payers covered by Morningstar equity analysts.

The table below lists 22 Canadian stocks that have US-traded shares covered by Morningstar analysts and yield at least 1%. I’ll highlight the Morningstar analysts’ take on the dividends of the five names that meet the following criteria as of Oct. 31: a narrow or wide economic moat rating, a yield of 3% or more, and trade at a discount of 10% or more to their Morningstar fair value estimates.

Strong Yields From Canadian Wireless Firms

Telus TU, one of the Big Three Canadian wireless providers, trades at a 33% discount to fair value (the largest discount on the list), yields more than 8%, and has grown its dividend at a solid rate over the past five years. However, Morningstar analysts believe the company should opt for more modest dividend growth: “Telus has also continued raising its dividend at a mid- to high-single-digit clip each year despite other uses of cash. Though we think Telus would be better served by tempering dividend growth, management seems intent on continuing the increases. We still believe the firm can reduce leverage while growing the dividend as long as it doesn’t make any more major acquisitions. If it does additional deals, we think it would have to choose to stop raising the dividend. We don’t see major new spectrum auctions on the horizon, so we expect Telus’ leverage to decrease over the next few years.”

BCE BCE, another of the Big Three Canadian telecoms, trades at a similar discount to Telus while yielding 5.5%, despite a dividend reduction of more than 50% earlier this year. Morningstar analysts believe that the reduced rate is maintainable: “BCE’s dividend had turned into a financial burden for the firm, and in the first quarter of 2025, BCE cut it for the first time since the 2008 financial crisis. We don’t expect a need for a further reduction.”

Rogers Communications RCI has more than a 30% share of the Canadian wireless market, trades at a 22% discount to its fair value estimate, and yields 3.6%. Its dividend rate, however, has remained flat since 2019. Morningstar analysts expect dividend growth to resume, but not for a couple of years: “We believe the firm can resume increasing its dividend in 2027. Although dividend payments have regularly exceeded 50% of free cash flow, we forecast that this ratio will decline to below 30% on average over our forecast period. Slowing capital expenditure and the integration of Shaw (acquired in 2023) will continue to drive free cash flow, leaving room for dividend growth and debt reduction.”

Potash, Nitrogen, and Phosphate

Nutrien NTR, one of the world’s largest fertilizer companies, was formed in 2018 via the merger of PotashCorp and Agrium. Its stock currently trades at a 22% discount to fair value and yields 4.0%. The company has grown its dividend at an annualized rate of 4.2% over the past five years, and Morningstar analysts anticipate continued growth: “Nutrien pays a dividend, which is set for USD 2.18 per share in 2025 on an annualized basis. With no costly capacity expansion projects underway, Nutrien should continue to generate enough free cash flow in any given year to be able to raise its dividend and repurchase shares.”

A Footprint in More Than 100 Countries

The global portfolio of Restaurant Brands International QSR includes Burger King, Tim Hortons, and Popeyes. The stock trades at an 11% discount to fair value and yields 3.8%. Morningstar analysts note that the “firm’s approximately 70% dividend payout ratio remains attractive to income investors, handily outpacing the rest of our restaurant coverage.” Dividend growth over the past five years has been modest (3% annualized), but the analysts forecast that future increases will be much larger, with the dividend growing—in total—by 57% over the next five years.

A Few Words About Taxes

While I’m not a tax expert, the treatment of dividends from Canadian stocks can be more favorable for US investors than the treatment of dividends from some other non-US countries. Because of a tax treaty between the US and Canada, the withholding on dividends paid to taxable accounts can be reduced to 15% and may be recoverable when filing your income taxes. (However, the withholding percentage can be higher if the required tax forms are not filed.) Further, there is no withholding for dividends paid by Canadian stocks that are held by US investors in tax-deferred accounts, such as an IRA, with the exception of REITs. (I can attest to the 15% rate for taxable accounts and no withholding for IRAs, as I own shares of Enbridge ENB in both a taxable brokerage account and an IRA.)

As for capital gains taxes, for securities that trade on both US exchanges and the Toronto Stock Exchange, it’s preferable for US investors to purchase the US shares. By doing so, the gains are generally treated the same as they are for US stocks. However, for shares that trade exclusively on the Toronto exchange, calculating gains can be more complicated. (All of the stocks in the above table trade on US exchanges.) As always, consult with a tax professional for guidance before purchasing Canadian stocks.

Also, please note that Brookfield Renewable Partners BEP is structured as a partnership and issues a K-1 to its US investors. The partnership provides details about its structure and tax implications for US investors here.

A version of this article first appeared in the October 2025 issue of Morningstar DividendInvestor. Download a complimentary copy of DividendInvestor by visiting this website.