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3 Top Dividend Stocks to Buy Today

Recent market gyrations sent jitters through investors, as fears that stock valuations had disconnected from underlying fundamentals grew, leading many to believe that stocks were overvalued and a correction was due. While a correction didn’t emerge, the dip in stocks highlighted the short-term risks associated with investing and that investors shouldn’t lose sight of their long-term goals.

One of the easiest ways to achieve investing success is to invest for the long term in quality dividend-paying stocks. Here are three high-quality dividend-paying stocks to buy today. 

Now what?

First up is pipeline and midstream services company Pembina Pipeline Corp. (TSX:PPL)(NYSE:PBA).

Back in October 2017, it took advantage of depressed prices to close the needle-moving US$9.7 billion Veresen deal, which transformed Pembina into one of North America’s leading energy infrastructure companies. This gave its earnings a solid lift with adjusted EBITDA for the nine months to September 30, 2017, rising by an impressive 22% year over year. There is every sign that earnings will continue to grow at a solid clip.

The completion of the integration of Veresen into Pembina’s operations has unlocked synergies and efficiencies, while boosting its storage as well as transportation capacity. Then there is the $1.8 billion in growth projects, which are forecast to come online between now and 2020, thereby further boosting earnings.

Pembina’s earnings will also continue to grow because of its wide economic moat and the fact that as oil prices rise and production from the oil patch grows, there will be greater demand for its infrastructure and services. That bodes well for a further dividend increases from Pembina, which has hiked its dividend for the last six years straight, rewarding patient investors with a juicy 5% yield.

The second choice is electric utility Canadian Utilities  (TSX:CU). It has the longest track record of dividend increases for any Canadian publicly traded company, having hiked its dividend for 46 years straight, giving it a 4% yield. Because of its wide economic moat, dependable earnings, and the inelastic demand for electricity, its earnings have grown at a steady pace, rising by almost 4% year over year for the first nine months of 2017.

That trend will continue because of Canadian Utilities’s ongoing investment in expanding its operations, notably in regulated utilities. From 2017 to 2019, it has earmarked $5 billion for investment in expanding its operations, with a large portion of those funds being directed to growing its regulated utilities businesses, which will enhance its contracted cash flows.

Along with growing demand for electricity because of stronger projected economic growth in Canada, Mexico, and Australia, those factors will give earnings a healthy bump, causing its stocks to appreciate and supporting further dividend increases.

Finally, there is Canadian National Railway Company (TSX:CNR)(NYSE:CNI), which has hiked its dividend for the last 22 years to yield just under 2%.

Higher oil, coal, and metals prices bode well for rising freight-by-rail volumes, because firmer prices will lead producers to bolster production, while rail remains the only economic means of transporting bulk freight. This demand will be enhanced by growing transportation constraints for Canada’s petroleum pipeline network and Canadian National’s transcontinental rail network.

The positive effect of higher commodity prices on freight volumes can be seen in Canadian National’s 2017 results, where rail freight revenue grew by 8.5% and carloads by 10% compared to a year earlier. As that trend continues, and as the company focuses on cost cutting, it will boost its bottom line and support further dividend hikes. 

So what?

All three stocks are reliable, growing sources of income, and they stand to benefit from the uptick in economic growth expected over 2018 and 2019. These companies also possess solid defensive characteristics, including wide economic moats and relatively inelastic demand for their products as well as services, which protects their earnings. That makes them highly resistant to economic downturns and solid defensive stocks with considerable growth potential.

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Fool contributor Matt Smith has no position in any stocks mentioned. David Gardner owns shares of Canadian National Railway. The Motley Fool owns shares of Canadian National Railway. Canadian National Railway is a recommendation of Stock Advisor Canada. Pembina is a recommendation of Dividend Investor Canada.

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