TransCanada Corporation and Telus Corporation: 2 Dividend Champions to Buy and Hold for Decades

Here’s why TransCanada Corporation (TSX:TRP)(NYSE:TRP) and Telus Corporation (TSX:T)(NYSE:TU) are dividend champions that investors can buy and hold forever.

| More on:
The Motley Fool

TransCanada Corporation (TSX: TRP)(NYSE: TRP) and Telus Corporation (TSX: T)(NYSE: TU) are top dividend champions that investors can buy and hold forever.

In a low-interest-rate environment, investors turn to dividend-paying stocks for investment income because savings accounts and GICs simply don’t pay enough.

The challenge is finding stocks that have low risk and continually pay shareholders increasing dividends.

Here are two Canadian dividend stocks with a long history of rewarding shareholders with growing dividends.

TransCanada Corporation

This pipeline giant owns 57,000 km of natural gas pipelines in Canada, the U.S., and Mexico. The company also owns more than 20 power plants and holds natural gas storage facilities with more than 400 billion cubic feet of capacity.

TransCanada has been in the news a lot due to its ongoing struggle to get the Keystone XL pipeline approved. At some point, I think Keystone XL will go ahead, but TransCanada has a number of other developments on the go to keep the free cash flow coming.

In fact, TransCanada currently has more than $38 billion worth of commercially secured projects backed by long-term contracts or cost-of-service business agreements.

Huge opportunities in Latin America

Two expansion areas that could boost TransCanada’s future free cash flow even more are Mexico and Colombia.

TransCanada is quickly becoming a significant player in the Mexican pipeline market. The company expects to have total investment in the country of $2.6 billion by 2016, and investors should see that number rise moving forward as Mexico aggressively expands its natural gas transportation grid.

The opportunity for growth in gas-rich Colombia is also enormous, as the country is shedding its reputation as an unsafe place to work and invest.

TransCanada pays a dividend of $1.92 per share that yields about 3.3%.

The company has increased its dividend every year since 2003, and its stock price has increased more than 75% in the past five years.

Telus Corporation

Vancouver-based Telus Corporation is Canada’s fastest-growing communications company. The company has expanded beyond its stronghold in western Canada and now provides Canadians from coast to coast with a variety of communication products and services delivered across its world-class wireless and wireline networks.

Since 2000, Telus has committed more than $111 billion to build the networks and operations it needs to provide its customers with the best service possible.

The cost of acquiring a new customer is expensive, roughly $400, so it is important for the telecom companies to keep customers happy once they get them to subscribe to their services.

Telus is known for providing a high level of customer service in the extremely competitive Canadian mobile phone market. In its Q2 2014 earnings statement, the company reported that its postpaid mobile churn rate dropped to a record low of 0.9%.

Telus continues to earn higher per-customer revenue. Its second quarter blended average revenue per unit of $62.51 was the 15th consecutive quarter of year-over-year growth.

Big cash flow potential

One area of the company’s business that investors should watch carefully is its health services division. The company has invested nearly $1 billion creating a secure network for health-care professionals to monitor clients and transmit medical information.

Communications companies are looking for new high-margin opportunities to drive growth. Telus is already a market leader in this rapidly expanding field of online health services, and investors should see the health division contribute significantly more revenue moving forward.

Telus pays a dividend of $1.52 per share with a yield of 3.9%. The company has increased its dividend nine times in the past five years. The stock price is up more than 130% over the same time frame.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Andrew Walker has no position in any stocks mentioned.

More on Dividend Stocks

Happy couple being attended by office worker at office
Dividend Stocks

New Investors: 3 Top Tips to Get You Started

New investors may be itching to get started, but first, ensure you are properly set up and do your research!

Read more »

A plant grows from coins.
Dividend Stocks

With a 7.9% Dividend, This TSX Stock Can Help You Make $1,975 Per Year

Make steady income with this high yield dividend stock. This Canadian corporation has increased its dividend for 29 years.

Read more »

grow dividends
Dividend Stocks

2 Dividend Stocks to Use as Building Blocks for Lasting Wealth

Dividend stocks that are raising their dividends over time could create lasting wealth for investors. Here are a couple of…

Read more »

Glass piggy bank
Dividend Stocks

New Investors: How to Make the RRSP Work for You Now and Not Just in Retirement

The RRSP can work for you in retirement, but it can also bring huge benefits right now for investors looking…

Read more »

Senior couple at the lake having a picnic
Dividend Stocks

Retirees: 2 High-Yielding Dividend Stocks to Buy Today

These TSX dividend-paying stocks can be a retiree’s best friend in their self-directed portfolios for additional income in retirement.

Read more »

money while you sleep
Dividend Stocks

2 Stable Stocks for Sleep-Better Investing

Boasting rock-solid underlying businesses and great financials, these two stable stocks can be perfect holdings for your portfolio.

Read more »

Dividend Stocks

2 Dividend Stocks to Double Up on Right Now

After their recent declines, these two Canadian dividend stocks look even more attractive to buy for the long term.

Read more »

edit Colleagues chat over ketchup chips
Dividend Stocks

3 Common Investing Mistakes Almost Every Investor Makes

New investors, don't fall into these lesser-known mistakes many make over and over again! Instead, choose this investment for growth.

Read more »