3 of the Best TSX Dividend Stocks to Buy With $500 in July 2021

These TSX stocks have long dividend payment histories, generate resilient cash flows, and have high-quality earnings bases.

| More on:
analyze data

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

It’s always advisable to invest in top-quality dividend stocks that can help you generate a regular passive income in times of high volatility and uncertainty in the market. Besides offering a regular income, top dividend-paying companies are known for their ability to generate high-quality earnings, which drives their stock prices higher and boosts investors’ wealth in the long run. 

With steady income and growth in mind, I have shortlisted the three best TSX stocks with long dividend payment histories, resilient cash flows, and high-quality earnings bases. So, if you’ve got $500, consider adding these top stocks to your portfolio right now.

Enbridge

Enbridge (TSX:ENB)(NYSE:ENB) is among the top income stocks listed on the TSX Index. The energy company has consistently paid dividends for over 66 years and offers a high yield of 6.7%. Meanwhile, it raised its dividend for 26 consecutive years at a CAGR of 10%, which is incredible.

I believe Enbridge remains well positioned to consistently enhance its shareholders’ value through increased dividends. Its diversified cash flows, contractual framework, continued momentum in the core business, recovery in mainline volumes, and strength in the gas and renewable power business are likely to drive its future earnings and dividends. Also, its $16 billion secured capital program, cost-saving measures, and revival in mainline throughput are likely to drive its cash flows and, in turn, its dividends. 

Looking ahead, Enbridge projects to deliver an average annual total shareholder return of 13%. Furthermore, Enbridge’s payouts are safe and sustainable in the long run.

Canadian Utilities 

Canadian Utilities (TSX:CU) is another reliable dividend stock for investors looking to build a steady passive-income portfolio. This utility company has raised its dividend for the longest period (49 years in a row) and remains well positioned to continue to increase it further in the coming years. Currently, it offers a dividend yield of over 5.1%. 

Canadian Utilities generates most of its earnings from the rate-regulated and contractual assets, implying that its payouts are very safe and sustainable in the long term. Further, Canadian Utilities continues to invest in highly contracted and rate-regulated assets that provide a solid foundation for earnings and dividend growth. 

Overall, I believe its high-quality asset base, contractual arrangements, improvement in its energy infrastructure business, and cost-savings initiatives could continue to drive its earnings and dividend at a decent pace.

Fortis

Like Canadian Utilities, Fortis (TSX:FTS)(NYSE:FTS) is another top bet to generate a steady income flow. Moreover, Fortis stock is likely to add much-needed stability to your portfolio. Notably, Fortis has rewarded its shareholders with increased dividend payments (for 47 consecutive years) and expects to increase it annually by 6% in the next five years. Further, the company’s payouts are safe and sustainable. Fortis currently pays a quarterly dividend of $0.505 a share and offers a decent yield of 3.7%.

Fortis’s higher dividend payments are supported by its diversified and regulated assets, which deliver predictable cash flows. I expect the company’s low-risk business, highly contracted and regulated assets, and growth rate base to continue to drive future dividend payments. Meanwhile, its continued investments in infrastructure, strategic acquisitions, and solid opportunities in the renewable power business will likely support its future growth rate.

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 FORTIS INC.

More on Dividend Stocks

edit Back view of hugging couple standing with real estate agent in front of house for sale
Dividend Stocks

Why Real Estate Stocks Are a No-Brainer Addition to Your Portfolio

Real estate stocks, especially REITs, offer some distinct advantages over other types of stocks, making them must-have additions to most…

Read more »

Various Canadian dollars in gray pants pocket
Dividend Stocks

3 Top TSX Dividend Stocks to Buy for Monthly Passive Income

Top TSX stocks with monthly dividends now trade at cheap prices for investors seeking passive income.

Read more »

Canadian Dollars
Dividend Stocks

Create Free Passive Income and Turn it Into Thousands With 1 TSX Stock

If you can't afford to invest, you can certainly create passive income another way and use that to invest in…

Read more »

Payday ringed on a calendar
Dividend Stocks

Canadian Dividend Investors: 2 ETFs That Pay Monthly Income With High Yields

Dividend ETFs often pay out monthly distributions compared to dividend stocks.

Read more »

think thought consider
Dividend Stocks

2 Stocks I Own and Will Buy More of if They Fall

Stocks tend to go up in the long run. Therefore, buying a basket of diversified stocks on dips should lead…

Read more »

Various Canadian dollars in gray pants pocket
Dividend Stocks

2 Oversold TSX Dividend Stocks to Buy for Passive Income

Blue-chip dividend stocks such as Royal Bank of Canada and Manulife Financial pay investors a tasty forward yield.

Read more »

TFSA and coins
Dividend Stocks

TFSA Passive Income: 3 Solid Stocks to Earn $355 Every Month

Looking to earn steady passive income? Here are three solid TSX stocks that can help you earn a worry-free passive…

Read more »

Technology
Dividend Stocks

RRSP Investors: 2 Stocks to Buy in August for Dividends and Capital Gains

RRSP investors can still find top TSX dividend stocks trading at cheap prices today for a buy-and-hold portfolio.

Read more »