The search for dividend stocks is still on. Sure, investors have plenty of other opportunities in this market. Bonds are providing a reasonable yield at around 5%. For investors worried about a recession, these are risk free assets to hold while sitting out the market.

However, these dividend stocks, all of which yield less than short-term Treasurys, may still be a worthwhile investment. These companies tend to raise their dividends over time, providing a growing income stream (perfect for certain investor types). It’s also because these stocks have excellent growth profiles that may outperform bonds over the medium-term.

Who knows what the future holds? But for dividend investors looking for growth, value and a reasonable yield, these are three of my top picks. They also happen to be Canadian dividend stocks that may be overlooked by domestic investors.

Let’s dive in.

Restaurant Brands International (QSR)

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In 2022, Restaurant Brands International (NYSE:QSR), the parent company of Burger King, Tim Hortons, Popeyes and Firehouse Subs, had a total of 30,722 restaurant locations, mostly franchised. All of its brands experienced same-store sales growth and opened new locations, indicating a robust business.

In Q1, Restaurant Brands exceeded earnings expectations on both fronts. It achieved a 9.7% jump in revenue year-over-year, to $1.59 billion, which was $30 million higher than anticipated. The company’s first-quarter earnings per share of 75 cents were 11 cents better than predicted. With strong growth in comparable and system-wide sales, Restaurant Brands had a positive start to the year despite inflation and other macro challenges.

Restaurant Brands’ current dividend yield is 3.02%, which is likely to increase alongside the company’s profit growth. Shareholders have slightly outperformed the market average since its public offering in 2014 by reinvesting dividends. Therefore, investing $1,000 in Restaurant Brands now could lead to future market outperformance.

Fortis (FTS)

multiple powerline towers are shown against a sunset and a distant city skyline. AQN stock

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Fortis (NYSE:FTS) is the biggest investor-owned utility firm in Canada, serving Canada, the United States and the Caribbean. Its assets are 99% regulated, consisting of 82% regulated electric and 17% regulated gas. Fortis is listed on both the Toronto and New York stock exchanges. 64% of its assets are located in the US, 33% are in Canada and 3% are in the Caribbean.

Fortis has shown resilience in its results during economic uncertainties due to the consistent demand for its utility services. Despite the current environment of high inflation and interest rates, Fortis remains strong with a liquidity position of C$3.8 billion available from $5.9 billion credit facilities at the end of Q4 2022.

Fortis maintains a payout ratio of approximately 70% of earnings and is committed to increasing its dividend in upcoming years. Its competitive edge lies in its size and cross-border exposure, with over 50% of its revenue generated in the U.S. thanks to its timely acquisitions of regulated utilities since 2013.

Toronto-Dominion Bank (TD)

Toronto-Dominion (TD) Bank logo on building

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Regulators’ delay of Toronto-Dominion Bank’s (NYSE:TD) acquisition of First Horizon ended up being advantageous for the bank, as both companies decided to terminate the merger agreement. TD will compensate First Horizon with a $200 million cash payment, in addition to the $25 million fee reimbursement due from the merger agreement.

TD Bank has been consistent in delivering both capital appreciation and strong dividend yield over decades, making it a good option for long-term investors. It has limited its exposure to demographic concerns by focusing on growth in the US, which should allow for continued stock appreciation despite its high domestic exposure like all Canadian banks.

TD stock has decreased after its recent earnings report, but Meny Grauman, an analyst at Scotiabank, believes that the sell-off was an exaggeration. The decline in TD’s net interest margin is slowing down, which explains why the earnings estimates for 2023 have been lowered. However, interest rates are still favorable, and TD may achieve a full-year earnings beat. Accordingly, I think this dividend stock, which yields 4.6% at the time of writing, is worth a look for investors seeking value in the banking sector amid the ongoing turmoil.

On the date of publication, Chris MacDonald has a position in QSR. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

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