Canada’s central bank kept the benchmark interest rate unchanged at 2.25%, marking the second consecutive meeting with rates on hold. The decision reflects the central bank’s balancing act to support domestic growth amid an uncertain economic environment.
However, the recent surge in oil price volatility triggered by the Iran conflict has renewed fears about inflation. This has led to speculation that interest rate hikes could return if price pressures intensify. However, the central bank may choose to keep rates steady for longer as the domestic economy faces several challenges. Among them are the potential impacts of increasingly protectionist trade policies from the U.S., which could dampen trade activity and slow overall growth. Holding the interest rate steady could help cushion the economy during this uncertain period.
For investors, this environment makes it more challenging to generate higher income. As a result, high-yield dividend stocks look attractive. Canadian companies with a consistent record of paying and growing dividends, offering high yield and backed by strong fundamentals, can provide solid income even as interest rates remain unchanged.
Against this backdrop, here are two Canadian dividend giants I’d buy with rates on hold.
A person stands in front of several doors representing different U.S. stock options for Canadian investors.
Canadian dividend giant #1: Enbridge
For investors seeking reliable income while interest rates remain on hold, Enbridge (TSX:ENB) is a compelling dividend play. The Canadian energy infrastructure giant has been paying dividends for more than 70 years across multiple commodity cycles and economic slowdowns. Further, it has increased its dividend at a compound annual growth rate of 9% every year since 1995.
Notably, Enbridge generates most of its revenue from regulated assets and long-term take-or-pay contracts. These arrangements provide predictable income and support steady distributable cash flow (DCF), insulating the company from commodity price volatility and supporting dividend payments.
Inflation protection also strengthens the investment case. About 80% of Enbridge’s earnings before interest, taxes, depreciation, and amortization (EBITDA) is indexed to inflation. At the same time, its vast pipeline and energy infrastructure network links major supply and demand hubs across North America, ensuring high utilization and steady demand.
Inflation protection is another key advantage. Approximately 80% of Enbridge’s EBITDA is indexed to inflation. Further, its vast network of pipelines and energy infrastructure connects major supply and demand hubs across North America, resulting in high asset utilization and positioning Enbridge to benefit from ongoing energy demand regardless of short-term market conditions.
Enbridge currently offers a dividend of $0.97 per share ($3.88 annually), yielding 5.2% based on the recent closing price. Further, it targets a sustainable payout ratio (between 60 and 70% of DCF) and expects to grow its dividend at a mid-single-digit rate in the years ahead.
Canadian dividend giant #2: Brookfield Renewable Partners
Income investors looking for dividend giants could consider adding Brookfield Renewable Partners (TSX:BEP.UN). It is a leading publicly traded renewable power platform with a diversified portfolio that includes hydroelectric, utility-scale solar and storage facilities, wind, and other sustainable energy solutions.
Brookfield Renewable continues to benefit from long-term contracted power agreements. These contracts provide predictable cash flows, which, in turn, help support stable, growing distributions for investors. Recently, the company increased its annual distribution by 5%, and it is yielding about 5.3%.
Brookfield Renewable also has a strong record of rewarding shareholders. Since its market debut in 2011, it has delivered at least 5% annual distribution growth for 15 consecutive years. This consistency highlights the resilience of its business model and the stability provided by its long-term contracts and diversified asset base.
Looking ahead, several structural trends could continue to support Brookfield Renewable’s growth. Global electricity demand is rising rapidly, driven in part by the expansion of digital infrastructure and the growing energy needs of artificial intelligence. At the same time, governments and commercial enterprises are increasing investments in clean power, creating a favourable environment for renewable energy providers.
Brookfield Renewable appears well-positioned to benefit from these trends. Its strategy of recycling capital from mature assets into new opportunities allows it to continually fund growth projects. In addition, an expanding development pipeline and investments in battery storage and grid modernization will support its long-term growth and dividend payouts.