Top 3 TSX Stocks to Supercharge Your Passive Income

Dividend stocks are the cheapest and best way to generate a steady inflow of cash.

| More on:
analyze data

Image source: Getty Images

There are plenty of options to boost your passive-income stream. However, in my opinion, dividend stocks are the cheapest and best way to generate a steady inflow of cash. So, if you plan to bolster your passive-income stream, here are the top three TSX to buy now.

Fortis

Fortis (TSX:FTS)(NYSE:FTS) stock is an obvious choice when it comes to reliable passive income that could grow over time. Its long history of dividend payments and ability to consistently increase it makes Fortis an ideal investment for passive-income seekers. It has 47 consecutive years of dividend payment increases. Furthermore, Fortis is guiding a 6% average annual growth in its dividends through 2025. 

Fortis’s confidence over its dividend payouts stems from its low-risk and diversified utility assets. Fortis owns 10 regulated utility businesses that account for 99% of its earnings. Meanwhile, its $19.6 billion capital plan would drive its rate base at a CAGR of 6% through 2025. I believe rate base growth and increase in retail electricity sales will likely drive its earnings and, in turn, its dividends. Further, an increase in renewable generation capacity and strategic acquisitions augur well for future growth. 

Currently, Fortis pays an annual dividend of $2.02 a share, reflecting a yield of 3.6%.

Enbridge 

When it comes to a growing passive-income stream, one cannot go wrong with Enbridge (TSX:ENB)(NYSE:ENB) stock. It’s worth noting that Enbridge’s dividend has a CAGR (compound annual growth rate) of 10% since 1995. Furthermore, this energy infrastructure company has paid dividends for more than 66 years. Its diversified cash flow streams and contractual framework generate strong distributable cash flows and support higher dividend payments. 

Looking ahead, Enbridge’s diverse income streams, resilient business model, and predictable cash flows bode well for growth. Meanwhile, recovery in mainline volumes, favourable long-term energy outlook, strategic acquisitions, and a $17 billion secured capital program will likely drive its EBITDA. Furthermore, toll escalators, productivity savings, and capacity optimization are expected to support its distributable cash flow per share.

Currently, Enbridge pays an annual dividend of $3.34 per share, translating into a high yield of 6.6%. 

TC Energy 

TC Energy (TSX:TRP)(NYSE:TRP) is another reliable stock for passive-income investors. Like Enbridge and Fortis, TC Energy has also paid and increased dividends for a very long period. Notably, TC Energy’s dividend has a CAGR of 7% since 2000. Meanwhile, it is projecting a 5-7% growth in its annual dividend in the future years.

TC Energy’s solid dividend guidance is backed by its regulated and contracted asset base that generates strong cash flows. Its assets remain resilient to economic cycles and witness higher utilization, which supports its revenues and earnings. Meanwhile, its $21 billion capital program and solid developmental pipeline indicate that future payouts are safe while the company could continue to increase its dividends at a decent pace.  

Overall, TC Energy’s predictable cash flows and ability to fund growth initiatives indicate that it could continue to deliver solid returns for its shareholders in the coming years. It pays an annual dividend of $3.48 a share, reflecting a yield of 5.7%. 

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

stock research, analyze data
Dividend Stocks

How Much to Invest to Get $500 in Dividends Every Month

TSX dividend stocks such as Enbridge, TD Bank, and Telus, can help you earn $500 in monthly dividend payments.

Read more »

Golden crown on a red velvet background
Dividend Stocks

Dividend Powerhouses: Canadian Stocks to Fuel Your Portfolio

These two top Canadian dividend aristocrats are some of the top stocks on the TSX to buy now and hold…

Read more »

Dial moving from 4G to 5G
Dividend Stocks

This Undervalued Dividend Stock is Worth Buying Right Now

Want an undervalued dividend stock with long-term potential and a juicy yield? Here's an option you may regret not buying…

Read more »

A worker gives a business presentation.
Dividend Stocks

1 Stock I’m Buying Hand Over Fist in July Despite the Market’s Pessimism

This top dividend stock is going through a rough patch, but don't let that count out all the growth we've…

Read more »

person on phone leaning against outside wall with scenic view at airbnb rental property
Dividend Stocks

2 TSX Stocks Poised to Have a Big Summer

Restaurant Brands International (TSX:QSR) stock and another darling that could be too cheap to ignore this summer.

Read more »

HIGH VOLTAGE ELECRICITY TOWERS
Dividend Stocks

Forget Fortis Stock: Buy This Magnificent Utilities Stock Instead

Looking for high dividends and returns? Then I'm sorry, but Fortis (TSX:FTS) stock probably isn't for you.

Read more »

Increasing yield
Dividend Stocks

2 High-Yield (But Slightly Risky) Stocks to Keep Your Eye on

Have these top TSX dividend stocks finally bottomed?

Read more »

Target. Stand out from the crowd
Dividend Stocks

2 Dividend Stocks I’d Buy if They Fall a Bit

Any near-term decline in these two top Canadian dividend stocks will make them look even more attractive.

Read more »