Are you sitting on some extra cash? Consider investing it in some relatively safer TSX dividend stocks for the long term. It will create a stable passive-income stream and also a reserve for your sunset years. Here are three such Canadian dividend stocks to buy in 2022.
BCE
Canada’s biggest telecom stock BCE (TSX: BCE)(NYSE: BCE) offers an attractive total-return potential, with its juicy yield and strong growth prospects. Its robust position in the 5G race, one of the largest subscriber bases, and solid financials differentiate it from peers. BCE stock returned 25% last year, notably outperforming its two main peers.
The company saw a decent earnings growth in the last few quarters, as restrictions loosened. It has invested $3.4 billion so far in network improvements and 5G rollout in 2021. The amount is 25% higher than last year, indicating its aggressive stance ahead of the crucial 5G battle. As a result, BCE could see subscriber base expansion, and, ultimately, accelerating earnings growth in the next few years.
BCE stock currently yields 5.3%, higher than TSX stocks at large. Investors can expect stable dividend growth in the long term, mainly driven by its stable earnings and strong balance sheet. BCE is an attractive bet, particularly for income-seeking investors, because of its low-risk, average return prospects and handsome yield.
Suncor Energy
While almost all asset classes are trading at record levels this year, crude oil and gas are still trading at a hefty discount against their peaks. So, considering a strong demand increase amid full re-openings, crude oil could eye US$100-per-barrel levels this year.
Canada’s largest oil-sands player Suncor Energy (TSX: SU)(NYSE: SU) could be among the beneficiaries of these tailwinds in 2022.
Suncor Energy reported a solid jump in its earnings in 2021 after a notable dip in 2020. The earnings recovery fueled a decent dividend hike and helped replenish its balance sheet.
Importantly, Suncor Energy is entering 2022 with a fairly strong position relative to the last year and could see handsome growth if oil and gas prices remain supportive.
SU stock returned 50% last year, underperforming peers. SU stock is currently trading at a dividend yield of 5.6%, one of the highest among peers. It could see another generous dividend hike this year, given the robust free cash flow growth prospects.
Fortis
Top Canadian utility stock Fortis (TSX: FTS)(NYSE: FTS) is my third pick for dividend investors.
It generates a significant chunk of its earnings from regulated operations, which enable stability and visibility. As a result, it has stable shareholder payouts and has increased dividends for the last 48 consecutive years.
Fortis’s stable earnings will be the key to its consistently growing dividends going forward. The management intends to grow shareholder payouts by 6% annually through 2025. FTS stock currently yields 3.6%, marginally higher than TSX stocks at large.
Apart from the stable dividends, slow-moving stocks like Fortis provide an added safety because of their low correlation with broader markets. Thus, we see investors taking shelter with utility stocks as markets turn volatile.
