Finding the top Dividend Aristocrats that you can buy today and hold for decades is easier than finding a needle in a haystack. Only companies with a five-year dividend-growth history make it to the distinguished list.
Investors must know that even if a stock meets the minimum dividend-growth requirement, it doesn’t guarantee dividend stability. The first step in the selection process is to review TSX’s sector diversification. You can choose from 11 primary sectors, where nearly all have at least one representative.
However, investing in lifetime gems, one from the financial services and utility sectors, requires minimal evaluation. Royal Bank of Canada (TSX:RY)(NYSE:RY) and Canadian Utilities (TSX:CU) are shoo-ins on my list.
The most valuable brand in Canada is also the dream investment of investors. With its enormous size ($175.92 billion market capitalization), RBC is well positioned to weather economic downturns. Moreover, its dividend track record of nearly 151 years is a remarkable achievement.
RBC has held strong market positions for years in retail, commercial, and investment banking. Expanding its footprint in the U.S. remains a top priority of management. The bank is likewise strengthening its competencies in digital banking. Its extensive portfolio of financial products now includes digitally enabled services.
Evolving its branch format is ongoing, because RBC wants to increase customer relevancy. Also, the continuous building of a high-performing global asset management business should drive growth. RBC has a deep moat, given its rich heritage, large asset base, and strong technology foundation.
If you were to invest today, you could purchase RBC at $123.47 per share. Canada’s largest lender pays a 3.5% dividend and maintains a less-than-55% payout ratio. Its 45,467.59% (13.51% CAGR) total return in the last 40.3 years lends credence to RBC’s viability as a buy-and-hold, blue-chip stock.
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Longest dividend-growth streak
Canadian Utilities has built a portfolio of utilities and energy infrastructure assets through the years since commencing operations in 1927. In the 21st century, the company delivers essential services and provides innovative business solutions in utilities, energy infrastructure, and retail energy. The scope and scale of operations of this $9.43 billion company are global.
Canadian Utilities delivers natural gas and electricity to communities throughout Alberta and northern Canada. Its clean hydroelectricity keeps the lights on in Mexico while it operates an electricity system in Puerto Rico. In Australia, CU has highly efficient natural gas-fired power plants.
Five utilities (electricity transmission and distribution, natural gas distribution and transmission, and international natural gas distribution) contribute to adjusted earnings. Notably, 95% of earnings come from regulated sources. CU’s ongoing concern is to build a globally diversified portfolio of utility and energy-related infrastructure assets until 2022.
Canadian Utilities is not only a Dividend Aristocrat but a dividend all-star. Why? The utility stock has the longest dividend-growth streak. Management has increased its dividend for 49 consecutive calendar years. The uninterrupted dividend-growth dates back to 1972. As of May 21, 2021, the share price is $35.17, while the dividend yield is a hefty 5%.
Don’t beat around the bush!
Stop beating around the bush and choose Royal Bank of Canada and Canadian Utilities. Both stocks are excellent buy-and-hold investments for risk-averse investors and current and future Canadian retirees.
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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 Christopher Liew has no position in any of the stocks mentioned.