Dynacor Group Inc T.DNG

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They assess DNG's fair value at $6.50. GLTA

Dividend Grow Stocks are Back in 2024

Interest rates are moving lower, and dividend stocks are on the rise.
2024 has been a positive year for dividend stocks, and the momentum may be just beginning.

Plenty of the top dividend growth stocks from KeyStone’s Income Research in 2024 have produced both significant share (or unit) price appreciation, but have also significantly grown their dividends (distribu- tions):

• Capital Power Corp. (CPX): Up 32% and increased its dividend by 6%.

• BSR REIT (HOM.U): Up 22% and increased its distribution by 9.3%.

• Boardwalk REIT (BEI.UN): Up 26% and increased its distribution by 22%.

• EQB Inc. (EQB): Up 22% and increased its dividend by 25%.

• goeasy Ltd. (GSY): Up 20% and increased its dividend by 22%.

  After two years of unprecedented monetary tightening, interest rates are starting to come down. So far, the Bank of Canada has cut its key rate three times, and the U.S. Federal Reserve recently announced its first rate cut of the cycle—a surprise 50 basis point reduction, which was larger than the market expected.

  As interest rates decline, yields on GICs and bonds are dropping, making dividend-paying stocks increas- ingly attractive by comparison.

  Many high-quality dividend stocks—particularly higher-yielding ones—have been largely overlooked by investors in recent years. GIC yields peaked in mid-2023, offering sizable returns of over 5%, which enticed investors away from dividend payers. This held back stock prices of otherwise very healthy dividend com- panies, creating exceptional value opportunities.

  Since then, we’ve seen GIC and bond yields begin to fall, bringing investors (and their capital) back to the dividend stock market. As it appears that central banks are just beginning their interest rate-cutting cycle, the flow of investor interest away from fixed income and back into dividend stocks may also just be start- ing.

  We expect continued cash inflows into high-quality dividend growth stocks – large and small.

  We have included recent updated BUY recommendations on two top Canadian Dividend Growth Stocks from our research within this report, Brookfield Infrastructure (BIP.UN:TSX) and Exchange Income Corporation (EIF:TSX).

  Additionally, we note that two of the small to mid-cap stocks, Dynacor Group Inc. (DNG:TSX) and Enghouse Systems (ENGH:TSX) offer both solid dividend yields as well as strong capital appreciation potential.