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2 Reliable Dividend-Growth Stocks to Buy in an Uncertain Market

Investors are looking at today’s lofty market and wondering where they can put some new money to work.

Let’s take a look at Fortis Inc. (TSX:FTS)(NYSE:FTS) and BCE Inc. (TSX:BCE)(NYSE:BCE) to see why they might be attractive picks.


Fortis owns natural gas distribution, power generation, and electric transmission businesses in Canada, the United States, and the Caribbean.

The diversified nature of the assets provides a nice hedge for investors who are concerned about owning stocks that rely on a single product or operate in a narrow market.

In addition, Fortis gets more than 90% of its revenue from regulated businesses, which means cash flow should be reliable and predictable.

The company has grown over the years through a mix of organic developments and strategic acquisitions, and that trend continues.

Last year, Fortis spent US$11.8 billion to purchase Michigan-based ITC Holdings. This followed on the heels of the 2014 acquisition of Arizona-based UNS Energy for US$4.5 billion.

Management expects cash flow to rise enough to support annual dividend growth of at least 6% through 2021. Fortis has raised the payout every year for more than four decades, so investors should feel comfortable with the guidance.

The current quarterly payout provides a yield of 3.6%.


BCE just wrapped up its acquisition of Manitoba Telecom Services in a deal that moves the company to top spot in the Manitoban market and gives BCE a solid base in central Canada to expand its presence in the western provinces.

Management has been on the acquisition trail for a number of years, gobbling up regional telecom players and media assets.

Today, BCE’s media group includes sports teams, a television network, specialty channels, radio stations, and an advertising business. BCE also owns interests in retail stores.

These assets, combined with the world-class wireline and wireless network infrastructure, create a very powerful company in the Canadian communications market.

BCE generates significant free cash flow and pays its dividend out of that money. The current distribution provides a yield of 4.7%.

Is one more attractive?

Both stocks tend to hold up well when the broader equity markets hit some turbulence.

If you want the highest yield and a steady stock you can tuck away for a decade or two, BCE might be the way to go today.

If you prefer to have access to the United States and like the idea of the majority of the company’s revenue coming from regulated assets, Fortis is a top pick.

The best option might be to add a bit of both to the portfolio.

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

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