The 5 Best Dividend Aristocrats to Buy in April 2021

Despite the high volatility earn steady passive income through Canada’s top dividend-paying stocks.

risk/reward

Image source: Getty Images

Despite the high volatility in the stock market and the uncertain pace of economic recovery, investors could continue to earn steady passive income through Canada’s top dividend-paying companies. Here we’ll focus on five TSX-listed Dividend Aristocrats that have paid and raised their dividends for a very long period. Further, their solid fundamentals and diverse cash flow streams suggest that these companies could continue to hike their dividends at a decent pace over the next decade. 

Algonquin Power & Utilities 

Algonquin Power & Utilities (TSX:AQN)(NYSE:AQN) has consistently enhanced its shareholders’ returns through higher dividend payments. Notably, the utility company increased its dividends by 10% annually over the past decade and announced another 10% hike in its annual dividends for 2021. 

The continued growth in its rate base, long-term contractual arrangements, and high-quality earnings support higher dividend payments. Algonquin Power & Utilities expects its rate base to increase by about 11% in the coming years. Meanwhile, its earnings are likely to grow by 8-10% during the same period, implying that investors could expect its dividends to increase at a similar pace. It offers a dividend yield of about 4% at the current price levels. 

Scotiabank 

Scotiabank (TSX:BNS)(NYSE:BNS) has been paying dividends since 1833. Meanwhile, it has increased its annual dividends at a compound annual growth rate of 6% since 2009, reflecting the strength of its high-quality earnings base. Notably, Scotiabank’s exposure to the high-growth banking markets has helped it to consistently boost its investors’ returns through increased dividend payments. 

I believe Scotiabank’s diverse revenue sources, exposure to high-growth markets, and an uptick in its loan portfolio following the economic reopening could continue to boost its bottom line. Meanwhile, the expected decline in credit provisions and expense management is likely to cushion its earnings, resulting in higher dividend payments. Scotiabank’s dividend yield stands at a decent 4.6%. 

Enbridge

Enbridge (TSX:ENB)(NYSE:ENB) has paid dividends for about 66 years. Meanwhile, the energy infrastructure company increased it in the past 26 years at a compound annual growth rate of 10%. The company’s robust dividend payment history reflects the strength in its core business and ability to generate resilient distributable cash flows. 

Enbridge has over 40 diverse sources of cash flows. Meanwhile, the momentum in its gas and renewable energy business continues to support its payouts. I believe the recovery in energy demand and improvement in its mainline volumes will likely boost its cash flows significantly. Further, about $16 billion secured capital program lays a strong foundation for future dividend growth. Enbridge yields about 7.3% at the current price levels, which is very safe. 

Fortis

Fortis (TSX:FTS)(NYSE:FTS) has increased its dividends for 47 consecutive years. Furthermore, the utility company expects to increase it by about 6% annually in the next five years. With its low-risk, regulated, and diversified assets, Fortis generates predictable cash flows that support its higher dividend payments. 

Fortis expects its rate base to increase by about $10 billion over the next five years, which is likely to support its earnings, in turn, its dividend payments. The company currently offers a decent dividend yield of 3.7%. 

Canadian Utilities 

Canadian Utilities (TSX:CU) has increased its dividends for 49 consecutive years and could continue to grow it further in the coming years on the back of its high-quality earnings base. The company derives the majority of its earnings from the regulated assets that generate predictable and growing cash flows, supporting higher dividend payouts. 

I believe its continued investments in the regulated and contracted assets and cost efficiencies could continue to drive its earnings and future dividend payments. Canadian Utilities offers a high and safe yield of 5.2%. 

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 Sneha Nahata has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Enbridge. The Motley Fool recommends BANK OF NOVA SCOTIA and FORTIS INC.

More on Dividend Stocks

Two seniors float in a pool.
Dividend Stocks

TFSA: How to Earn $1,890 in Annual Tax-Free Income

Plunk these investments into your TFSA to earn passive income and avoid the taxman.

Read more »

Engineers walk through a facility.
Dividend Stocks

1 TSX Stock I Wouldn’t Touch With a 10-Foot Pole

AtkinsRéalis (TSX:ATRL) is one TSX stock I'd never invest in.

Read more »

edit Woman in skates works on laptop
Dividend Stocks

3 No-Brainer Stocks to Buy Under $30

These three stocks all offer a huge deal for investors looking for dividends, as well as growth that will last.

Read more »

You Should Know This
Dividend Stocks

How to Convert a $300 Monthly Investment Into $338 in Monthly Income

If you want a certain amount in monthly passive income, invest a similar amount today and leave the rest to…

Read more »

Increasing yield
Dividend Stocks

3 Income Stocks With Big Yields to Consider in April 2024

If you haven’t yet made your March investments, here are three income stocks to buy the dip and lock in…

Read more »

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

RRSP Investors: Don’t Miss Out on This Contribution Hack!

This hack has so many benefits for you -- not just when you put it in your RRSP but for…

Read more »

A red umbrella stands higher than a crowd of black umbrellas.
Dividend Stocks

Passive Income: 2 Safe Dividend Stocks to Own for the Next 10 Years

Dividend stocks such as Manulife and Fortis can help you generate a stable and recurring passive-income stream.

Read more »

Young woman sat at laptop by a window
Dividend Stocks

3 Dividend Stocks Everyone Should Own for the Long Haul

For investors looking for top-tier dividend stocks to buy and hold for the long term, here are three of my…

Read more »