3 Dividend-Growth Stocks on the TSX You Can Buy for 2022

Dividend stocks such as Enbridge and Brookfield Renewable Partners should be part of your shopping list right now.

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Investing in dividend stocks allows you to derive a predictable stream of passive income as well as benefit from long-term capital gains. The ideal dividend stock is one that generates steady cash flows across business cycles and has a wide economic moat, permitting the company to increase payouts each year.

Here, we’ll look at three such dividend-growth stocks Canadians can buy for 2022.

Enbridge

It’s difficult to look beyond Enbridge (TSX:ENB)(NYSE:ENB) when we shortlist Canadian dividend-paying companies. A Dividend Aristocrat, Enbridge, recently increased its dividends for the 27th consecutive year, providing investors with a tasty forward yield of 7.2%.

The energy heavyweight expects to generate between $15 billion and $15.6 billion of adjusted EBITDA next year, which will be 9% higher compared to 2021. It also expects distributable cash flows between $5.20 and $5.50 per share in 2022 which is 10% higher than the current year. A key driver of higher cash flows is the deployment of $10 billion in expansion projects, which will be completed in 2021.

ENB stock continues to trade at a discount and is valued at a forward sales to cash flow multiple of just nine. The company also authorized up to $1.5 billion in share buybacks, which will further increase its cash flow per share going forward.

Enbridge now expects to plow $4 billion in expansion projects in 2022 in addition to its current backlog of $9 billion, which will increase its base of cash-generating assets and support higher payouts.

Brookfield Renewable Partners

A renewable energy giant, Brookfield Renewable Partners (TSX:BEP.UN)(NYSE:BEP) offers investors a forward yield of 3.4%. Brookfield has increased dividends at an annual rate of 6% in the last 11 years. It expects payouts to grow between 5% and 9% going forward.

Generally, dividend stocks with a high yield don’t have exciting growth prospects. But Brookfield Renewable is optimistic about generating annual returns of 15% in the long term. After adjusting for dividends BEP stock has returned over 500% to investors in the last decade, easily surpassing gains of the broader indices.

The global shift towards clean energy solutions will be a key driver of Brookfield’s rising cash flows, making it a solid long-term bet for dividend investors right now. Its cash flows are highly diversified, and no single region accounts for over 10% of total cash flow. Further, its power-purchase agreements have an average contract life of 14 years.

Algonquin Power & Utilities

The final stock on my list is Algonquin Power & Utilities (TSX:AQN)(NYSE:AQN). Valued at a market cap of $12.26 billion, AQN stock has returned 352% to investors in the past decade. However, it’s also down 18% from all-time highs, allowing investors to buy the dip and benefit from a forward yield of 4.8%.

In Q3 of 2021, Algonquin increased EBITDA by 27% to $252 million, while its adjusted net earnings per share stood at $0.15, which was in line with its year-ago period.

The company deployed $3.4 billion in capital expenditures, allowing it to increase quarterly dividends from $0.199 per share in 2020 to $0.215 per share in 2021.

The Foolish takeaway

These three dividend stocks will enable investors to generate inflation-beating returns over time. An investment of $10,000 in each of these stocks will allow investors to earn more than $1,500 in annual dividends.

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 Aditya Raghunath owns ALGONQUIN POWER AND UTILITIES CORP., Brookfield Renewable Partners, and ENBRIDGE INC. The Motley Fool recommends Enbridge.

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