3 Dividend All-Star Stocks to Buy in July

Canadian investors should target dividend all-star stocks like Imperial Oil Ltd. (TSX:IMO)(NYSE:IMO) to beef up their portfolios in July.

| More on:
Hands holding trophy cup on sky background

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn moresdf

Choosing the right dividend stock can be a challenging exercise. Newer investors may initially be drawn to dividend stocks with sky-high yields. However, these can also be some of the riskiest and most volatile. Instead, Canadians should look to target dividend stocks that have shown reliability and consistency over the years. Today, I want to look at three dividend all-star stocks that are worth holding in your portfolio for the long term.

This energy stock qualifies as a dividend all-star

In late March, I’d discussed why energy stocks were a suitable target for investors on the hunt for discounts. The oil and gas sectors were some of the first to be hit hard due to the COVID-19 pandemic. Fortunately, the global reopening has spurred a demand rebound. This is good news for stocks like Imperial Oil (TSX:IMO)(NYSE:IMO).

Imperial Oil is a top Canadian petroleum company. Its shares have dropped 36% in 2020 as of close on July 3. However, the stock has climbed 27% over the past three months. In Q1 2020, the company saw its net income fall $481 million from the prior year due to headwinds generated by the pandemic. Fortunately, Imperial Oil reported strong Upstream volumes of 419,000 gross oil-equivalent barrels per day.

The company boasts an excellent balance sheet as we head into the summer. Shares of Imperial Oil last had a price-to-earnings (P/E) ratio of 9.5 and a price-to-book (P/B) value of 0.6. The stock looks undervalued right now. Moreover, Imperial Oil offers a quarterly dividend of $0.22 per share. This represents a 4.1% yield. The company has delivered dividend growth for 25 consecutive years.

One bank stock to buy on the dip

Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) is the fifth largest of the Big Six Canadian banks. Shares of CIBC have dropped 12% in 2020 so far. CIBC’s hefty dividend and strong track record make it a great candidate for a dividend all-star stock.

Like its peers, CIBC saw its provisions for credit losses soar in Q2 2020 in the face of the COVID-19 pandemic. Fortunately, Canada has managed to bring its case count down to a manageable level and is progressing well with its reopening. This should provide a boost to banks in the weeks and months to come.

Shares of CIBC last possessed a favourable P/E ratio of 10 and a P/B value of 1.1. The stock last paid out a quarterly dividend of $1.46 per share, representing an attractive 6.4% yield. CIBC has achieved dividend growth for nine straight years.

Investors can play defence with this dividend stock

Back in May, I’d discussed why grocery retailers qualified as pandemic-proof stocks. Empire Company is a top grocery retailer in Canada. It owns and operates brands like Sobeys, Farm Boy, IGA, and others. Shares of Empire have increased 10% in 2020 so far.

Empire possesses a modest dividend yield of 1.4%, but it remains a strong defensive option in this uncertain environment. Moreover, it has delivered dividend growth for 25 consecutive years. This dividend all-star stock still boasts a favourable P/E ratio of 15 and a P/B value of 2.2.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Ambrose O'Callaghan has no position in any of the stocks mentioned.

More on Dividend Stocks

growing plant shoots on stacked coins
Dividend Stocks

5 Dividend Stocks to Buy With Yields Upwards of 5%

These five companies all earn tonnes of cash flow, making them some of the best long-term dividend stocks you can…

Read more »

funds, money, nest egg
Dividend Stocks

TFSA Investors: 3 Stocks to Start Building an Influx of Passive Income

A TFSA is the ideal registered account for passive income, as it doesn't weigh down your tax bill, and any…

Read more »

A red umbrella stands higher than a crowd of black umbrellas.
Dividend Stocks

3 of the Safest Dividend Stocks in Canada

Royal Bank of Canada stock is one of the safest TSX dividend stocks to buy. So is CT REIT and…

Read more »

Growing plant shoots on coins
Dividend Stocks

1 of the Top Canadian Growth Stocks to Buy in February 2023

Many top Canadian growth stocks represent strong underlying businesses, healthy financials, and organic growth opportunities.

Read more »

stock research, analyze data
Dividend Stocks

Wherever the Market Goes, I’m Buying These 3 TSX Stocks

Here are three TSX stocks that could outperform irrespective of the market direction.

Read more »

woman data analyze
Dividend Stocks

1 Oversold Dividend Stock (Yielding 6.5%) to Buy This Month

Here's why SmartCentres REIT (TSX:SRU.UN) is one top dividend stock that long-term investors should consider in this current market.

Read more »

IMAGE OF A NOTEBOOK WITH TFSA WRITTEN ON IT
Dividend Stocks

Better TFSA Buy: Enbridge Stock or Bank of Nova Scotia

Enbridge and Bank of Nova Scotia offer high yields for TFSA investors seeking passive income. Is one stock now undervalued?

Read more »

Golden crown on a red velvet background
Dividend Stocks

2 Top Stocks Just Became Canadian Dividend Aristocrats

These two top Canadian Dividend Aristocrats stocks are reliable companies with impressive long-term growth potential.

Read more »