Investing in dividend stocks brings a regular inflow of cash. Further, dividend-paying companies generate solid earnings and cash flows that make them reasonably stable. While there are plenty of Canadian stocks that offer dividends, I believe only a few are reliable bets in the long run.
Here I have shortlisted five of the best TSX dividend stocks that investors could rely upon to generate a growing passive income stream. I have chosen stocks that have consistently paid and increased their dividends for a very long period. Further, their payouts are sustainable in the long run. Also, these Dividend Aristocrats are priced under $100.
Enbridge (TSX:ENB)(NYSE:ENB) ranks among the top dividend-paying companies listed on the TSX and offers a high yield of 6.7% at current levels. For those who don’t know, Enbridge has regularly paid quarterly dividends for over 66 years and raised it by 10% for the last 26 consecutive years.
Looking ahead, the energy company anticipates generating a total shareholder return of 13%, implying that it could continue to enhance its shareholders’ value through higher dividend payments. Its diverse cash flow streams, long-term contractual framework, and $16 billion secured capital program augur well for future growth. Meanwhile, the recovery in mainline volumes, growing renewable business, and cost-savings measures should continue to drive its earnings and future dividend payments.
Pembina Pipeline (TSX:PPL)(NYSE:PBA) is another top-quality Canadian dividend stock that has paid dividends since 1997 and offers a safe yield of 6.4%. It has raised its annual dividend by about 5% in the last decade and is its high-contracted assets suggest that it could continue to grow its dividend at a decent pace in the coming years.
Pembina generates solid fee-based cash flows, which drives its payouts. Meanwhile, a recovery in energy demand, higher volumes and pricing, a strong backlog of growth projects, and operating leverage could drive its cash flows and enable it to pay a higher dividend.
TC Energy (TSX:TRP)(NYSE:TRP) has raised its dividends at a compound annual growth rate (CAGR) of 7% for more than two decades. Currently, it offers a stellar yield of 5.6%, which is very safe. Thanks to its high-quality assets and higher utilization rate, it projects to increase its annual dividend by 5-7% in the coming years.
I expect TC Energy to deliver solid earnings in the coming years, reflecting continued strength in its underlying business, contractual arrangements, secured capital program, and a solid development portfolio. Moreover, the recovery in energy demand and economic expansion further strengthens my bullish view.
Fortis (TSX:FTS)(NYSE:FTS) has been raising its dividends for a very long period. The utility company raised its dividends for 47 consecutive quarters and expects it to grow by 6% annually over the next five years.
Thanks to its rate-regulated utility assets, the company generates predictable cash flows that drive higher dividend payments. Its low-risk business, growing rate base, and continued investments in infrastructure ensure that Fortis could deliver robust cash flows in the coming years. At current price levels, Fortis offers a decent yield of 3.6%.
AltaGas (TSX:ALA) is an attractive bet for investors looking for growth and income. It pays a monthly dividend and currently yields over 3.8%. I expect AltaGas to deliver higher profits owing to its regulated utility assets, growing rate base, and rapidly growing midstream business.
AltaGas’ balanced portfolio of low-risk utility assets and high-growth midstream operations augur well for future growth and positions the company to deliver solid earnings and cash flows.
The company sees double-digit growth in its EBITDA and EPS in 2021, which is encouraging. Momentum in its utility business, higher export volumes in the midstream operations, and cost optimization strengthen my optimism on AltaGas.