Top 3 Dividend Stocks to Buy Before the Year Runs Out

2025-12-19 09:30:00 ET

As we look set to turn the page to a new year, the search for top-tier picks in certain categories is on. Whether you’re looking to rebalance your portfolio, take some tax losses, or engage in any sort of clean-up or research for 2026, we’ve got you covered.

I’m going to discuss three of my top dividend stock picks for 2026. These are each companies I think have unique catalysts and upside potential next year relative to the overall market.

And while I think next year could be a bumpy one, these companies’ durable balance sheets and cash flow profiles, which support robust dividend yields, should allow investors to wait out whatever turmoil is to come.

Hydro One

Among the Canadian utility stocks I don’t touch on much, but probably should, Hydro One ( TSX:H ) is increasingly looking like a unique opportunity to me here.

Shares of the utility company have been on a roll this year, surging to a new all-time high as investors continue to look for sneaky ways to play the AI transformation.

I think that line of thought is likely going to be proven correct, given Hydro One’s focus on serving Eastern Canadian markets, where power prices can be among the lowest in the country (and North America). A surge of investment activity around data centres could propel this stock much higher over time.

And with a dividend of 2.5% (lower after this company’s rapid rise of late) and a solid balance sheet, with a reasonable valuation to boot, this is a top dividend stock I’m bullish on for 2026.

Suncor

Energy prices remain muted, but Suncor’s ( TSX:SU ) stock chart below doesn’t show much of this pain reflected in its share price.

Much of that is the result of Suncor’s focus on operating efficiency, boosting its core margins and lowering its all-in costs to produce a barrel of oil. This has made the company even more profitable at current levels. Which, combined with production growth, could lead to higher earnings in a lower oil price environment — something many investors would not have said a few quarters ago.

The company’s 4% dividend yield is well-covered, and could continue to rise if earnings grow as expected. Of course, commodities can be volatile, and I don’t have my crystal ball with me today. But for those thinking long term, this is a stock that looks like an anchor portfolio holding for energy exposure, if I’ve ever seen one.

Toronto-Dominion Bank

With a dividend yield of 3.4% and a reasonable multiple relative to its historical levels, Toronto-Dominion Bank ( TSX:TD ) is another top Canadian stock I think can have a banner 2026.

Financials are coming back into focus for investors, largely due to improving net income margins tied to a steepening yield curve. I expect this trend to remain in place next year, as central banks cut on the short end, with longer-duration bonds holding steady due to concerns around inflation.

For those looking for a top-tier financial institution with a solid track record of dividend growth and capital appreciation upside, I think this is an intriguing play heading into an uncertain year.

The post Top 3 Dividend Stocks to Buy Before the Year Runs Out appeared first on The Motley Fool Canada .

Fool contributor Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy .

2025