Three Canadian Dividend Stocks for a $1,000 Forever Portfolio: A Value Investor's Analysis

For the value investor, Canadian dividend stocks represent a classic opportunity: steady income, a margin of safety, and the potential for capital appreciation through a durable business model. The core principle is to identify companies with a wide economic moat-whether through regulatory protection, geographic reach, or entrenched market position-that can sustain and grow their payouts through economic cycles. This approach prioritizes financial resilience and a predictable cash flow over speculative growth.

Three distinct approaches to this strategy are exemplified by Scotiabank, Enbridge, and TD Bank. Each offers a margin of safety, but through different business models and with varying valuations and risk profiles.

Scotiabank presents a financial services moat built on global reach and digital transformation. The bank's improving earnings provide a tangible foundation for its dividend. In the fourth quarter of fiscal 2025, Scotiabank reported a 23% year-over-year increase in net income to $2.4 billion. This operational strength supports its current 4.4% annualized dividend yield. For a value investor, the bank's focus on cost discipline and cross-border services offers a path to growth even in a low-rate environment, though it remains exposed to broader credit and interest rate risks.

Enbridge, by contrast, embodies the utility moat: a regulated, essential infrastructure business with a legendary track record of shareholder returns. The company's dividend policy is a masterclass in sustainability, targeting a payout ratio of 60-70% of distributable cash flow. This disciplined approach was reinforced just last month with the announcement of a 31st consecutive annual dividend increase, raising the payout by 3% effective March 1, 2026. The stock's appeal lies in its predictable cash flows from a portfolio of pipelines and renewable projects, offering a reliable income stream with minimal cyclical volatility.

TD Bank offers a third, more traditional financial moat: a diversified, domestic-focused banking giant with a wide economic moat. Its stock has delivered strong returns, climbing 74.52% in 2025. The bank's dividend is well-covered, with a typical dividend cover of approximately 2.0, indicating the earnings are more than sufficient to support the payout. Its wide moat provides a buffer against competition, but it is also more sensitive to Canadian economic cycles and interest rate changes than a pure utility.

The bottom line is that these three stocks represent different paths to the same goal: a sustainable income stream backed by a durable business. The value investor's task is to weigh the trade-offs: Scotiabank's growth potential versus its cyclical earnings, Enbridge's rock-solid cash flows versus its regulatory and commodity price exposure, and TD Bank's proven strength versus its sensitivity to domestic conditions. Each offers a margin of safety, but the choice depends on the investor's risk tolerance and time horizon.

Scotiabank: The Resilient Bank with a Growth Premium

Scotiabank has emerged as a standout performer in the Canadian market, delivering a powerful combination of earnings growth, a resilient dividend, and a valuation that offers a premium for its stability. The bank's financial engine is firing, with net income surging 23% year-over-year to $2.4 billion in the fourth quarter of fiscal 2025. This robust profitability, driven by strong contributions from both its Canadian and international operations, has powered a nearly 30% rally in the stock year-to-date. The market is clearly rewarding a bank that can grow earnings even as it navigates a complex macro environment.

The bank's competitive moat is built on a global footprint and a disciplined focus on its core businesses. Its continued investment in digital banking and expansion of cross-border financial services provide a durable growth platform. This international presence, however, also introduces complexity and currency risk, which the market must weigh against the benefits of diversified revenue streams. The key to Scotiabank's resilience appears to be its cost discipline, which has helped maintain earnings power even as revenue growth faces headwinds.

For income-focused investors, the dividend is a cornerstone of the investment case. Scotiabank offers a forward dividend yield of 4.2% and has paid dividends continuously since 1833. The policy is reviewed annually, with quarterly payments adjusted based on capital adequacy and regulatory requirements. This structure provides a predictable income stream while maintaining a prudent capital buffer. The recent dividend hike to $1.10 per share in Q4 2025 signals management's confidence in the bank's earnings sustainability and its ability to return capital to shareholders.

Valuation-wise, Scotiabank trades at a forward P/E of 18.6, which is a premium to the broader market. This multiple reflects the market's assessment of the bank's growth trajectory and its status as a reliable dividend payer. The stock's recent 37% surge over the past 120 days underscores its strong momentum. Yet, with the shares trading near their 52-week high, the bank has priced in much of its recent success. The forward-looking multiple suggests investors are paying up for the expectation of continued earnings growth and a stable, growing payout.

The bottom line is that Scotiabank represents a growth-oriented value play. It combines solid top-line expansion with a commitment to shareholder returns, all within a resilient capital framework. For investors, the bank offers a compelling blend of yield and growth, but the premium valuation leaves little room for error. The stock's future performance will hinge on the bank's ability to consistently meet or exceed the high expectations embedded in its price.

Enbridge: The Utility with a Visible Growth Pipeline

For income investors, Enbridge presents a classic utility story with a modern twist: a visible, capital-intensive growth pipeline that directly funds its dividend. The company's structural advantage lies in its regulated franchises, which provide the stable cash flows needed to finance expansion. This creates a virtuous cycle where growth projects, once built, generate the earnings that support further investment and shareholder returns.

The growth engine is now in high gear. Enbridge has approximately $8 billion of new projects entering service in 2026. This isn't speculative capex; it's a pre-built portfolio of low-risk, commercialized assets across its Liquids Pipelines, Gas Transmission, and Gas Distribution businesses. The company's 2026 guidance reflects this, with adjusted EBITDA guidance of $20.2 to $20.8 billion and distributable cash flow per share of $5.70 to $6.10. This pipeline ensures that the dividend growth mechanism is not a promise, but a predictable outcome. The company just announced a 3% increase to its common share dividend for 2026, marking its 31st consecutive annual raise. This payout is underpinned by a target dividend payout ratio of 60-70% of distributable cash flow, a discipline that has allowed the dividend to grow at a 9% compound annual rate over the past 30 years.

Valuation, however, tells a story of recent underperformance. Despite the robust growth outlook, the stock has traded 3.2% below its 20-day average and is down 2.6% year-to-date. This disconnect is reflected in the forward multiple: the stock trades at a forward P/E of 15.6, which is reasonable for a utility but not a premium. The market may be discounting the stock for reasons beyond the company's control, such as broader sector sentiment or interest rate sensitivity. Yet, the fundamentals are clear. With a forward dividend yield of 5.9%, the yield offers a tangible return while investors wait for the market to reprice the value of that predictable growth.

The bottom line is that Enbridge offers a rare combination: a high-yield, dividend aristocrat with a capital plan that is already in motion. The $8 billion of projects coming online next year provides a visible path to higher cash flows, which will directly support the company's stated goal of delivering superior shareholder returns. For a patient investor, the current price action may represent a tactical entry point into a business where the growth story is no longer a forecast, but a scheduled delivery.

TD Bank: The High-Quality Franchise at a Discount

For income-focused investors, Toronto-Dominion Bank presents a compelling case of a high-quality franchise trading at a significant discount. The bank's wide economic moat and consistent execution are reflected in its reliable dividend, which has been increased for nine consecutive years. This track record of growth, combined with a forward dividend yield of 3.3%, offers a tangible return while the stock trades at a valuation that appears subdued relative to its peers.

The valuation gap is stark. TD Bank's forward price-to-earnings ratio sits at 8.3, a substantial discount to Scotiabank's forward P/E of 18.6. This multiple compression suggests the market is pricing in a lower growth premium or higher risk for TD, despite its own robust performance. The bank's stock has delivered strong returns, up 30.85% over the past 120 days, yet it still trades at this discount, creating a potential mispricing opportunity for those who value stability and yield.

The dividend itself is a key pillar of this investment thesis. With a payout cover of approximately 2.0, the dividend is well-protected by earnings, reducing the risk of a cut. The bank has a history of raising its quarterly payout, with the next dividend of C$108 per share set to be paid in late January. This consistency provides a reliable income stream, a buffer against market volatility, and a tangible signal of financial strength.

The bottom line is that TD Bank offers a classic value proposition: a high-quality, dividend-growing company with a durable competitive position, currently priced for a lower growth story than its own track record might suggest. For investors seeking a steady yield and a margin of safety, the discount to both its own historical multiples and peer valuations is a material feature to consider.

Conclusion: Weighing the Margin of Safety for a $1,000 Forever Portfolio

For a long-term investor building a $1,000 Forever Portfolio, the choice between a blue-chip bank and a pipeline giant hinges on balancing predictable income, growth visibility, and exposure to macroeconomic headwinds. Both Scotiabank and Enbridge offer compelling yields-4.4% and 5.9% respectively-but their paths to delivering that income diverge significantly, creating different risk-adjusted profiles.

Scotiabank's strength lies in its earnings resilience and capital position. The bank's 23% year-over-year increase in net income to $2.4 billion in Q4 2025 demonstrates its ability to navigate a complex rate environment. Its primary catalyst for 2026 is the continued execution of cost discipline and digital investments, which can buffer against the pressure of a potential sharp economic slowdown. However, the bank's fortunes are intrinsically tied to the credit cycle. The overarching risk is a downturn that erodes loan quality and forces a provisioning spike, directly threatening its earnings and dividend sustainability. Its yield is a reward for bearing that cyclical risk.

Enbridge, by contrast, offers a more predictable growth story underpinned by tangible project execution. The company has announced 2026 financial guidance for Adjusted EBITDA of $20.2 to $20.8 billion and a 3% dividend increase to $3.88 annually. This guidance is driven by the $8 billion of new projects entering service in 2026, all backed by low-risk commercial frameworks and regulatory rate settlements. This provides a clear, multi-year income stream that is less sensitive to quarterly economic swings. The primary risks here are regulatory overreach or sustained volatility in commodity prices, which could pressure its cash flows. Yet, its growth is more visible and less cyclical than a bank's.

The margin of safety tilts toward Enbridge for a portfolio seeking durable, inflation-protected income. Its project pipeline offers a tangible buffer against the kind of earnings volatility that can hit banks during a downturn. Scotiabank's higher yield is a function of its greater exposure to systemic and credit risks. For a $1,000 Forever Portfolio, where the goal is to compound income with minimal disruption, Enbridge's model of steady, project-driven cash flow generation provides a more reliable foundation. It trades a slightly lower yield for a higher-quality, less cyclical income stream, which is the essence of a superior risk-adjusted return in a potentially volatile macro environment.