For long-term stock investing, Dividend Aristocrats often offer great total return potential. These dividend kings allow investors to take advantage of compounding over time to unlock huge gains.
Now, there’s no question that the market has had its share of turbulence recently. However, long-term investors can look past this by focusing on stocks with solid fundamentals.
While most stocks were hit hard during 2020, some have the resiliency needed to recover easily. So, these are the dividend kings investors would be most interested in.
Today we’ll look at two TSX giants that offer long-term stability to investors with reliable dividends.
This dividend king has long been a great example of a stable dividend stock. While it doesn’t typically offer tremendous share price growth, it consistently raises its dividend payout to investors.
This stability is underscored by a beta of 0.06, suggesting that Fortis is highly resilient to stock market swings. Over time, Fortis can deliver stable results for long-term investors.
Now, it’s important to understand how Fortis is able to be such a reliable stock. This is mainly due to the structure of its utility distribution channels, as nearly all of its services are provided through regulated contracts.
This means that Fortis has very predictable and certain means of generating revenue. As such, it often offers little in the way of performance surprises, but also offers a rock-solid dividend.
As of this writing, this dividend king is trading at $50.80 and yielding 3.98%. A near-4% yield attached to a name like Fortis should be enticing for long-term investors.
When it comes to utility stocks with predictable but solid performance, Fortis is near the top of the heap.
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This dividend king offers investors both decent share price growth and an ever-growing dividend. Combine those and RY makes for a great long-term pick for investors.
Despite potential obstacles in the short run, sentiments for RY for the long haul should still be largely positive. Surely, super-low interest rates and things of the like aren’t ideal for the bank, but those are temporary measures.
As of this writing, RY is trading at $108.07 and yielding 4%. While this yield isn’t far in excess of RY’s typical yield, it’s still solid enough to attract long-term investors.
When discussing dividend kings, it’s hard not to mention practically any of the major Canadian banks. However, RY has long been the biggest fish in the pond and offers investors a great deal of reliability for the future.
Dividend kings strategy
FTS and RY are both incredibly reliable dividend stocks ideal for long-term investing. While they typically won’t net you high returns in any given year, the power of compounding over time helps investors win in the long run.
If you’re looking for some dividend kings to scoop up, these are certainly two names to keep in mind.
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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 Jared Seguin has no position in any of the stocks mentioned. The Motley Fool recommends FORTIS INC.