If you are investing in stocks for a consistent and growing dividend income, check my top five picks offering a reliable and high yield of at least 4%.
These TSX stocks have paid and raised dividends for the past several years and are well positioned to deliver strong earnings that will power their future payouts.
#1 Enbridge
Enbridge (TSX: ENB)(NYSE: ENB) is the first stock on my list, and there are good reasons why I am bullish about its prospects. It has consistently paid and increased its dividend, even in adverse market conditions. For instance, Enbridge’s dividends have consistently increased for 27 years in a row. Further, Enbridge offers a well-protected and stellar dividend yield of 6.4%.
Enbridge expects its distributable cash flows to grow at a decent pace, which will likely drive its future payouts. Its diverse cash flow streams, multi-billion-dollar secured projects, recovery in mainline volumes, and acquisitions are expected to boost its earnings and dividends. Moreover, growth opportunities in the renewables segment, revenue escalators, and higher asset utilization rate support my bullish outlook.
#2 Algonquin Power & Utilities
Algonquin Power & Utilities (TSX: AQN)(NYSE: AQN) owns a low-risk business that generates resilient cash flows and supports higher dividend payments. Notably, its regulated asset base and long-term contracts have helped the company to consistently pay and raise its dividend. For context, Algonquin Power has returned higher cash to its shareholders in the past 11 years. Moreover, its dividends have a CAGR of 10% during the same period. Also, it offers a solid dividend yield of 4.7%.
Looking ahead, Algonquin Power’s rate base is projected to increase at a double-digit pace, which will likely drive its EBITDA and earnings and, in turn, its future dividends. Moreover, strategic capital allocation and a growing renewable power-capacity expansion bode well for growth.
#3 TC Energy
Like Enbridge, TC Energy (TSX: TRP)(NYSE: TRP) has consistently paid and increased dividends for more than two decades. TC Energy’s regulated and contracted assets generate resilient cash flows that drive its dividend payments. It’s worth noting that TC Energy’s dividend has had a CAGR of 7% since 2000. Meanwhile, it projects 3-5% annual growth in its future dividends.
TC Energy offers a solid yield of 5.3%, which is very safe. Its strong secured capital projects, additional sanctioned projects, revenue escalators, and cost-saving initiatives will likely support earnings growth and future dividend payments. Moreover, its conservative dividend-payout ratio is sustainable in the long run.
#4 Canadian Utilities
Canadian Utilities (TSX: CU) is a must-have in your income portfolio. Its dividends have grown over the past 49 years. Moreover, its low-risk business and growing cash flows indicate that Canadian Utilities could continue to increase its dividend in the coming years.
Canadian Utilities generates almost all of its income from the resilient regulated and contracted assets, implying that its payouts are well protected. The company continues to invest in its regulated and contracted assets, which is expected to increase its high-quality earnings base and, in turn, its dividend. At current levels, Canadian Utilities offers a yield of 4.8%.
