After the sequence of aggressive rate of interest hikes, it was solely a matter earlier than the slower financial exercise would quiet down inflation. The Financial institution of Canada has set the goal steerage of attaining 2% inflation.

In December 2023, Canada’s annual inflation price was 3.4%. By January, analysts anticipated it to chill down to three.3%. Nonetheless, Canada’s annual inflation price decline was higher than analysts’ expectations at 2.9%. Regardless of beating analyst expectations, there may be nonetheless a good distance for Canada’s annual inflation price to match the federal financial institution’s 2% steerage.

Leaving your financial savings parked as money in a financial savings account means inflation will solely deteriorate its worth. With curiosity revenue nonetheless lagging behind the cooling inflation charges, it is perhaps higher to think about different methods to make use of your financial savings.

One approach to defend your capital could be investing it in income-generating shares with increased returns than the inflation charges deteriorating their worth. To this finish, dividend investing could be a superb method.

I’ll focus on two prime Canadian dividend shares you possibly can think about for this objective.

BCE

BCE (TSX:BCE) is a $41.92 billion market capitalization large within the Canadian telecom house. BCE inventory is a well-liked inventory for dividend traders. It has a strong enterprise with an ideal defensive attraction.

BCE generates sturdy money flows because of the important nature of its underlying enterprise. In an age the place folks all the time must be interconnected, telecom corporations like BCE inventory are going to grow to be more and more vital.

BCE has recurring revenues that permit it to fund capital bills and develop its dividends. The Montreal-based telecom firm has elevated its payouts for the final 16 years, making it a Canadian Dividend Aristocrat.

It has additionally invested in strengthening its 5G infrastructure and expanded its broadband web companies to extra prospects. As of this writing, BCE inventory trades for $45.95 per share, boasting a higher-than-usual 8.68% dividend yield you could lock into your portfolio.

Enbridge

Enbridge (TSX:ENB) is one other fashionable Canadian dividend inventory. The $103.69 billion market capitalization large operates in a cyclical trade. Nonetheless, Enbridge inventory has an ideal defensive attraction as a consequence of its enterprise mannequin.

Sometimes, vitality corporations are considerably impacted by the unstable commodity costs of hydrocarbons. Enbridge inventory has a enterprise mannequin that protects it from value volatility.

Enbridge owns and operates one of the vital advanced and intensive pipeline networks in North America. It’s chargeable for transporting loads of the crude oil, pure gasoline, and pure gasoline liquids produced and consumed within the area. As a substitute of charging based mostly on the value of the commodities it transports, Enbridge generates income based mostly on the amount.

Regardless of trade headwinds, Enbridge inventory has sustained wonderful money flows that it has used to develop dividends for over 20 years. As of this writing, Enbridge inventory trades for $48.78 per share and pays its traders dividends at a juicy 7.50% dividend yield.

• We simply revealed 5 shares as “finest buys” this month … be part of Inventory Advisor Canada to search out out if Enbridge Inc. made the record!

Silly takeaway

Dividend investing could be a superb means to make use of your financial savings to generate inflation-beating returns. Should you construct a strong dividend revenue portfolio in a Tax-Free Financial savings Account (TFSA), you possibly can benefit from the passive revenue with out incurring taxes on it.

Should you additionally reinvest the dividends by a dividend-reinvestment program, you possibly can speed up your tax-free wealth progress by the facility of compounding.