As a Canadian investor, it's important to diversify your portfolio and consider different investment strategies. One such strategy is dividend investing, which involves seeking out companies that offer regular dividend payments to stockholders.

Note: This calculation is based on the current dividend yield and the assumption that Royal Bank of Canada will maintain its current dividend payout. Dividends are subject to change based on the company's financial performance and decisions made by its board of directors.

Dividend-paying stocks are often perceived as having lower volatility compared to other stocks because companies that offer regular dividends are generally more established, financially stable, and have a reliable source of income. These companies typically have a history of consistent earnings growth and cash flow, which can provide some stability to stock prices during times of market volatility.

Dividend payments also tend to signify a company's maturity and success, and investors often view them as a sign of financial health. This positive perception can lead to less dramatic price swings in the stock, which can contribute to the overall perception of lower volatility.

Furthermore, dividend payments are often considered a key component of a company's overall return. As a result, many investors hold dividend-paying stocks for longer periods of time and are less likely to sell them due to short-term market fluctuations. This can also contribute to lower volatility, as there is less trading volume and less susceptibility to price movements caused by short-term fluctuations in the market.

Overall, dividend-paying stocks tend to be viewed as less risky compared to other types of stocks due to their overall stability.

According to historical data from the S&P/TSX Composite Index, reinvesting dividends from the Toronto Stock Exchange has resulted in significantly higher returns compared to not reinvesting dividends.

Example:

1. During the time period of 1986 to 2015, reinvesting dividends would have resulted in a total return of approximately 1,326%, while not reinvesting dividends would have only resulted in a total return of 693%. This means that the difference in total returns between the two strategies is a staggering 633%.

2. During the time period of 2000 to 2018, the S&P/TSX Composite Total Return Index, which includes the reinvestment of dividends, yielded a total return of 6.1% annually. In contrast, the S&P/TSX Composite Index, which does not include reinvestment of dividends, yielded a total return of only 2.6% annually.

(Source: Toronto Stock Exchange: Total Return Index vs. Price Index)

Therefore, it is clear from the data that reinvesting dividends from the Toronto Stock Exchange can lead to significantly higher returns over the long term, compared to not reinvesting dividends.

Rather than spending time researching the best dividend paying companies or trying to formulate your best guess, use dividend paying exchange traded funds (ETFs).

With a dividend paying ETF, you get broad diversification to dividend paying companies in Canada, United States, and developed international markets.

Here are 5 Canadian Dividend ETFs you could invest in:

Note: Performance and yields are subject to change and should be checked before making any investment decisions.

Here are 5 U.S. Dividend ETFs you could invest in:

Note: The ".TO" at the end of each ETF symbol indicates that it is listed on the Toronto Stock Exchange and can be purchased using Canadian dollars. Performance and yields are subject to change and should be checked before making any investment decisions.

Here are the best 5 international dividend-paying ETFs, excluding North America, that can be purchased with Canadian dollars:

Note: The ".TO" at the end of each ETF symbol indicates that it is listed on the Toronto Stock Exchange and can be purchased using Canadian dollars. Performance and yields are subject to change and should be checked before making any investment decisions.