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The Dividend Knights may not be as regal as the Dividend Kings, who have raised their dividends for at least 25 consecutive years. That said, they are of interest to Canadian investors who want a better mix of growth and dividend growth without having to discard the names of companies that have not had the opportunity to increase their dividends for two and a half consecutive decades. I mean no disrespect to the Dividend Kings, but there is a world of dividend growth stocks out there that can offer solid total returns and growth over long periods of time.
In this article, we will look at two valuable names that could benefit as the Bank of Canada continues to cut interest rates, possibly at a faster pace than expected. To be sure, the Canadian economy is holding up pretty well, with inflation having declined dramatically.
That said, don't expect the Bank of Canada (or the US Federal Reserve south of the border) to bat an eye when the big moment comes. As rates come down, a wide range of companies will benefit greatly.
Whether we're talking about small-cap companies that have a lot of debt simply on the balance sheet, or rate- and cap-sensitive REITs and utilities, or the impact on the broader economy, lower rates are welcome news for a wide range of companies.
In this article, we'll take a look at two intriguing dividend stocks that I believe could be on the verge of a magnificent bull run as we move past the second round of rate cuts from Canada's central bank.
TD Bank
TD Bank (TSX:TD) is caught in a multi-year crisis, but I wouldn't give up on this $140 billion financial giant just yet. Not while it cleans up the mess of its previous money laundering fiasco. In fact, excess money laundering has weighed down TD stock for the better part of a year.
And with the stock seemingly stuck at the $80 level, I think investors looking for a solid dividend-generating company with long-term performance have a lot to appreciate in the name. Looking ahead, I think TD will put a fairly forgettable first three quarters of 2024 behind it. As the search for a successor to CEO Bharat Masrani progresses, I think TD stock can move steadily higher from here, even without a spectacular quarter.
Indeed, TD stock has been through a rough patch, but the good news is that a robust Canadian economy could help TD outperform some rather low expectations. With a dividend yield of 5.05% and a modest price-to-earnings (P/E) multiple of 18.6 times, I wouldn't be afraid to invest in the blue-chip stock this September.
International restaurant brands
International restaurant brands (TSX:QSR) is a fast-food powerhouse that looks increasingly undervalued as investors overreact to the so-called Ozempic (or GLP-1) headwind that could weigh heavily for some time. Additionally, Restaurant Brands appears to have done a better job than its peers of offering great deals amid inflation.
In fact, inflation has hit us hard in every sense. And fast food has not been a place to seek refuge, at least until the latest rush to win back customers through revamped value menus. With a stellar dividend yield of 3.42% and a P/E multiple of just 17.27 times, QSR stock looks to be a dividend knight to snap up while it's still in correction territory.