3 Top Dividend-Growth Stocks to Buy in January

Dividend-growth stocks such as TransCanada Corporation (TSX:TRP)(NYSE:TRP) are on the top of my list to buy in January. Find out why.

| More on:

For income investors, it makes sense to look out for top dividend-growth stocks. The companies, which grow their payouts regularly, send a very strong signal to investors about the stability and growth of their businesses.

A growing dividend is a strong indicator of the health of a company. Companies usually grow their dividends when they have predictable earning streams, manageable debt levels, and increasing free cash flow. Here are my top three dividend-growth stocks you could consider buying in January.

Bank of Nova Scotia 

Canadian banks are very reliable dividend payers. They not only have regular payouts, but they also grow them over time. The main factor behind this stability is their dominant position in the local market and their aggressive strategies to expand globally.

Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) stands out when it comes to paying a stable and growing dividend to its investors.

With a dividend yield of 3.8%, Bank of Nova Scotia pays $0.79 a share quarterly. You can count on Bank of Nova Scotia for a regular income stream for many years. The lender has paid dividends every year since 1832. It has hiked its payouts in 43 of the last 45 years — one of the most consistent records for dividend growth among major Canadian corporations.

Last year, investors got two dividend hikes from this lender, growing its payout about 7%. I expect a similar growth to continue in 2018, and that should be more than enough to beat the inflation.


Canadian telecom operators provide another avenue to earn stable and growing dividends. Canada has a very protective telecom market where the top four players control about 80% of the broadband and video market and more than 90% of the wireless market.

Among them, Telus Corporation (TSX:T)(NYSE:TU) offers an attractive opportunity to earn dividend income and benefit from the company’s growth potential. With growing wireless penetration and a robust immigration flow, Telus has a solid ground to grow its subscribers.

With a dividend yield of 4.1%, Telus has raised its dividend payout twice in 2017, taking total dividends to $1.97 a share — up 7.1% from $1.84 in 2016. Telus is aiming to increase its dividend with an annualized rate of 7-10% a year through 2019.

During the past five years, the stock returned 45% in total returns, including dividends and capital gains. I think this stock is a good pick for 2018 for investors seeking growing and stable income.


TransCanada Corporation (TSX:TRP)(NYSE:TRP) runs a very profitable business of natural gas and liquids pipelines, power generation, and gas-storage facilities. This company provides a good option to investors who want some exposure to the energy sector, which is crucial to the Canadian economy.

TransCanada operates businesses that produce hefty cash flows and aren’t too dependent on the cyclical nature of energy markets. It has increased its dividend payout for 17 consecutive years — a track record that is tough to match.

With oil prices showing strength in 2018, TransCanada shares are well on course to deliver even more attractive capital gains.

The company is undertaking $24 billion of near-term growth projects, which management says will support annual dividend growth at the upper end of 8-10% through 2020. With an annual dividend yield of 4.18%, TransCanada pays a $0.48 quarterly dividend.

The bottom line

Buying solid dividend-growth stocks should be a top priority for income investors in 2018. Growing your investment with dividends is a tested way to build your wealth.

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 Haris Anwar has no position in the companies mentioned.

More on Dividend Stocks

woman retiree on computer
Dividend Stocks

2 Dividend Stocks That Will Pay You for Years and Years

Top TSX dividend stocks are starting to look oversold.

Read more »

TFSA and coins
Dividend Stocks

2023 TFSA Contribution Time: 2 Dividend Stocks to Buy With $6,500

Are you interested in using some of your 2023 TFSA contribution room? Here are two dividend stocks to buy with…

Read more »

money cash dividends
Dividend Stocks

2 Stocks Under $100 You Can Buy and Hold Forever

While many stocks continue to trade cheaply, here are two of the best in Canada to buy today and hold…

Read more »

Senior Man Sitting On Sofa At Home With Pet Labrador Dog
Dividend Stocks

Retirees: 2 High-Yield Dividend Stocks to Buy for Passive Income

Given their solid underlying businesses and high dividend yields, these two dividend stocks are an excellent buy for retirees.

Read more »

Early retirement handwritten in a note
Dividend Stocks

2 TSX Dividend Stocks to Buy Today to Help You Retire Early

Buying these two reliable TSX dividend stocks today can help you retire early if you hold them for the long…

Read more »

Doctor talking to a patient in the corridor of a hospital.
Dividend Stocks

Is Northwest Healthcare Stock Oversold?

Northwest Healthcare stock has plummeted 41% so far this year on concerns over its financial health as interest rates shot…

Read more »

TFSA and coins
Dividend Stocks

How to Earn $1,800 Per Year in a Self-Directed TFSA

This TFSA investing strategy can reduce risk and still generate attractive tax-free passive income.

Read more »

edit Sale sign, value, discount
Dividend Stocks

TFSA Income: 2 Great Canadian Dividend Stocks Now on Sale

Top TSX dividend stocks now offer attractive yields.

Read more »