Written by Daniel Da Costa at The Motley Fool Canada
The Canadian Dividend Aristocrats list is one every dividend investor should be familiar with. Not every stock on the list will interest you or may be ideal for your portfolio, but generally, some of the best and most reliable dividend stocks you can buy are Dividend Aristocrats, so it’s a list you’ll want to keep up to date with and follow along for additions and removals.
To be considered a Canadian Dividend Aristocrat, there are a few requirements. But essentially, the most important requirements are that a company must have increased its annual dividend for at least five consecutive years and needs a minimum market cap of $300 million.
So, once a stock stops increasing its dividend consistently or has to trim or suspend its dividend, it’s removed from the list.
While the minimum is five years, there are some stocks that have streaks of more than 40 years and obviously, the longer the streak, the better a track record of not only maintaining the dividend but also constantly increasing it.
No matter what the length, nothing is ever a guarantee, but if a Dividend Aristocrat stock has been increasing its dividend payments every year for more than a quarter century, it must be doing something right.
What are the best stocks to buy in August?
Deciding which stocks are the best to buy in August largely depends on your portfolio and current asset allocation. Generally, though, with all the uncertainty right now, some of the best stocks to buy are defensive growth stocks.
Defensive growth stocks are ideal because they are investments that can protect your capital should the market environment continue to worsen but also offer growth potential so you don’t miss out if the economy sees a soft landing and rebounds faster than expected.
And many of the top Dividend Aristocrat stocks in Canada offer exactly this—defensive, recession-resistant operations with impressive long-term growth potential.
If you’re looking to add a top defensive growth stock to your portfolio today, here’s my top recommendation.
My top Dividend Aristocrat stock to buy now
If you’re looking for stocks to help shore up your portfolio in August, my top recommendation is Brookfield Infrastructure Partners (TSX:BIP.UN), the impressive Canadian Dividend Aristocrat.
Brookfield is highly defensive due to the operations it owns, in addition to the fact that they are diversified all over the world.
With assets like utilities, pipelines, ports, telecom towers and more, Brookfield’s assets are not only essential and, therefore, highly defensive, but much of its revenue is indexed to inflation as well.
And on top of the defensive assets Brookfield owns, management is constantly looking at selling off more mature assets and reinvesting that cash into new opportunities.
Brookfield is one of the best companies in the world at finding undervalued opportunities that it believes it can help turn around and improve their efficiency. This creates significant value for investors, as it often leads to an increase in the cash flow these assets generate.
With these assets generating more cash flow, Brookfield can choose to hold onto the assets or sell them off for a much higher price than it originally paid and once again recycle that capital into another new opportunity.
It’s this strategy that makes Brookfield one of the best defensive growth stocks on the market and allows it to constantly increase its distribution each year, putting it on the Canadian Dividend Aristocrats list.
Therefore, with the impressive infrastructure stock now trading near the bottom of its 52-week range and offering a yield of more than 4.8% at this price, it’s one of the best stocks you can buy in August.
This year, analysts expect it can grow its funds from operations by 11.7% as well as another 15% next year.
So, with all six analysts that cover the stock giving it a buy rating, and with its average analyst target price sitting at a more than 35% premium to where Brookfield trades today, there’s no question that it’s one of the best Canadian Dividend Aristocrats to buy in August.
The post My Top Dividend Aristocrat to Buy in August (and it’s Not Even Close) appeared first on The Motley Fool Canada.
Before you consider Brookfield Infrastructure Partners, you'll want to hear this.
Our market-beating analyst team just revealed what they believe are the 5 best stocks for investors to buy in August 2023... and Brookfield Infrastructure Partners wasn't on the list.
The online investing service they've run for nearly a decade, Motley Fool Stock Advisor Canada, is beating the TSX by 26 percentage points. And right now, they think there are 5 stocks that are better buys.
See the 5 Stocks * Returns as of 8/16/23
Fool contributor Daniel Da Costa has positions in Brookfield Infrastructure Partners. The Motley Fool recommends Brookfield Infrastructure Partners. The Motley Fool has a disclosure policy.