The Motley Fool

2 Top TSX Dividend Stocks to Buy and Hold Forever

Image credit: Photo by CIRA/.CA.

As we look forward to the end of the pandemic, the TSX and many major indices around the world are hovering around all-time highs. For investors who’d bought during the turmoil last year, such returns are certainly vindicating. For those who’d bought dividend stocks that dipped dramatically and locked in sky-high yields, all the better.

Indeed, yields have come down substantially in the past few quarters. However, some stocks still offer attractive yields with excellent long-term growth potential. Among my top two picks right now are Enbridge (TSX:ENB)(NYSE:ENB) and Fortis (TSX:FTS)(NYSE:FTS).

Here’s why.


Enbridge is one of the highest-yielding defensive dividend stocks on the market right now. Indeed, this pipeline player provides investors with a 6.7% yield. This yield is truly remarkable when one considers where bond yields are at today.

This yield is also remarkable when one considers the defensiveness of Enbridge’s business model. As a key pipeline player, Enbridge provides investors with cash flow stability that’s hard to find.

On the fundamental side of the equation, things also look rather decent for Enbridge investors. The company’s payout ratio stands at 72%. And Enbridge currently trades at only 15 times earnings. For a company of this quality, this yield and valuation multiple certainly are enticing.

Add to these facts the reality that Enbridge has raised its dividend for 25 years consecutively, and investors certainly have a lot to like about this energy infrastructure play. Indeed, Enbridge has committed to reducing its dividend increases to around 3% per year from here. The company’s excess cash will go instead to paying down debt and reinvesting in capital-intensive projects. However, given where the company’s yield is at today, it’s hard to argue these moves aren’t prudent. In fact, I like the direction Enbridge is headed. This is a company with plenty of upside, paying investors nearly 7% to be patient.


In the utilities space, Fortis is my top pick for those seeking reliable income over time.

It’s not Fortis’s 3.6% yield that attracts me, necessarily. There are higher-yielding opportunities in this space, and one seeking yield right now may highly gravitate toward the likes of an Enbridge in this regard.

However, Fortis’s track record of dividend growth is truly unmatched. For nearly five decades, Fortis has continued to hike its dividend. This historical track record is truly one of the greatest on the TSX and speaks to Fortis’s ability to grow its cash flows each and every year.

Like Enbridge, Fortis’s cash flows are very secure and stable. As demand for utilities continues to increase coming out of this pandemic, I think there are some near-term drivers that could create some tailwinds for investors. Accordingly, now may be the time to think about locking in a position in this stock.

Fortis expects to increase its dividend in the 6% range until 2025. For investors with a holding period of at least five years, this is a dividend stock to consider today.

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 Chris MacDonald has no position in any stocks mentioned in this article. The Motley Fool owns shares of and recommends Enbridge. The Motley Fool recommends FORTIS INC.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss an important event.

Iain Butler and the Stock Advisor Canada team only publish their new “buy alerts” twice a month, and only to an exclusively small group.

This is your chance to get in early on what could prove to be very special investment advice.

Enter your email address below to get started now, and join the other thousands of Canadians who have already signed up for their chance to get the market-beating advice from Stock Advisor Canada.