K-Bro Linen tops three dividend stocks to consider on the Toronto Stock Exchange

As the first half of 2024 draws to a close, the Canadian market has shown resilience and delivered strong performance, benefiting in particular from its more traditional sectors despite lower exposure to technology relative to its U.S. counterparts. This presents an attractive backdrop for investors interested in dividend stocks, which can offer both stability and income potential in a well-balanced portfolio given current economic conditions.

Top 10 Dividend Stocks in Canada

Name	Dividend yield	Dividend Rating
Bank of Nova Scotia (TSX: BNS)	6.83%	★★★★★★
Whitecap Resources (TSX:WCP)	7.13%	★★★★★★
Boston Pizza Royalties Income Fund (TSX: BPF.UN)	8.43%	★★★★★☆
Enghouse Systems (TSX: ENGH)	3.37%	★★★★★☆
Secure Energy Services (TSX:SES)	3.29%	★★★★★☆
Royal Bank of Canada (TSX:RY)	3.80%	★★★★★☆
Firm Capital Mortgage Investment (TSX:FC)	8.89%	★★★★★☆
Russel Metals (TSX:RUS)	4.57%	★★★★★☆
Canadian Western Bank (TSX:CWB)	3.16%	★★★★★☆
Canadian Natural Resources (TSX:CNQ)	4.22%	★★★★★☆

Click here to see the full list of 33 stocks in our TSX Top Dividend Stocks Analysis tool.

Let’s explore several notable options among the screener results.

Simply Wall St Dividend Rating: ★★★★★☆

Preview: K-Bro Linen Inc. operates in Canada and the United Kingdom, providing laundry and linen services to healthcare facilities, hotels and other commercial organizations, with a market capitalization of approximately C$354.92 million.

Operations: K-Bro Linen Inc. generates revenue of CA$330.33 million, primarily from its laundry and linen services to the healthcare and hospitality industries.

Dividend yield: 3.5%

K-Bro Linen maintains a consistent dividend, most recently declaring CAD$0.10 per share for the month of June, reflecting continued commitment despite a modest yield (3.48%) relative to leading Canadian dividend stocks. The company supports dividends with a sustainable payout ratio of 73.2% and a cash payout ratio of 38.5%. Additionally, K-Bro has demonstrated shareholder confidence through an active share buyback program, cancelling significant shares to potentially increase shareholder value, although its recent earnings show a slight decline year-over-year.

Simply Wall St Dividend Rating: ★★★★★☆

Preview: National Bank of Canada offers a range of financial services to a variety of clients, including individuals, businesses and governments, both domestically and internationally, with a market capitalization of approximately C$37.52 billion.

Operations: National Bank of Canada generates revenues from three main business segments: Wealth Management (CA$2.61 billion), Personal and Commercial Banking (CA$4.33 billion) and Financial Markets (CA$2.76 billion), to which are added contributions from specialized financing activities in the United States and international activities totalling CA$1.16 billion.

Dividend yield: 4%

National Bank of Canada has shown consistent dividend growth over the past decade, with a recent increase to C$1.10 per share for Q3 2024, a sign of reliability. While trading 41.5% below estimated fair value and offering a lower yield (3.97%) than major Canadian payers, its dividends are well covered by earnings with a payout ratio of 42.5%. Recent capital raising through private placements and equity offerings totaling nearly C$1 billion could support future financial flexibility, but raises questions about strategic allocations given the substantial C$12 billion in unspecified debt.

Simply Wall St Dividend Rating: ★★★★★☆

Preview: Royal Bank of Canada, with a market capitalization of C$210.95 billion, operates globally as a diversified financial services company.

Operations: Royal Bank of Canada generates revenue through various segments, including personal and commercial banking (C$20.92 billion), wealth management (C$17.47 billion), capital markets (C$10.70 billion) and insurance (C$5.91 billion).

Dividend yield: 3.8%

Royal Bank of Canada’s recent activities include several fixed income issuances, totalling significant amounts in various currencies, aimed at strengthening its capital structure. Notably, the bank issued €1 billion in green bonds and completed several other issuances ranging from $1.187 million to $3 million, consisting primarily of senior unsecured notes with variable coupon rates. These strategic actions demonstrate RBC’s focus on maintaining a strong capital base and liquidity profile. However, despite these efforts, RBC’s dividend yield of 3.8% is below the top quartile of Canadian dividend payers at 6.56%. Dividends are currently covered by earnings with a payout ratio of 50%, suggesting sustainability but highlighting potential growth concerns relative to peers.

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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to constitute financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. Our goal is to provide you with focused, long-term analysis based on fundamental data. Please note that our analysis may not factor in the latest price-sensitive company announcements or qualitative information. Simply Wall St has no position in any of the stocks mentioned.

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