The Canadian stock market, as represented by the S&P/TSX Composite Index, has been experiencing a sustained uptrend leading up to the end of 2024. This upward momentum is indicative of new all-time highs for the index.
With potential volatility on the horizon due to upcoming U.S. elections and the possibility of a Santa Claus rally, the market outlook remains uncertain in the coming weeks. Investors may consider taking advantage of the current market conditions by investing in dividend stocks while share prices are lower, as this can result in higher yields before a potential market correction.
Two dividend stocks that warrant consideration for investment portfolios are the Canadian Imperial Bank of Commerce and Hydro One. The Canadian Imperial Bank of Commerce, a major Canadian bank with a significant market capitalization, offers a dividend yield of 4.42% and stands to benefit from lower interest rates and increased economic activity. Meanwhile, Hydro One, a utility company with a strong presence in Ontario, offers a dividend yield of 2.87% and operates in a regulated business model that ensures stable revenue growth.
Investors seeking to maximize their returns may consider holding dividend stocks in a Tax-Free Savings Account (TFSA) to enjoy tax-free dividends, interest, and capital gains. Allocating a portion of TFSA contribution room to holdings such as CIBC and Hydro One can provide opportunities for long-term growth and income generation without tax implications.
