Dividend investing is a gift that keeps on giving, provided that you invest in the right income-generating assets in your portfolio. The payouts from dividend stocks with decent yields can offer you far better returns than you might get with fixed-income assets like bonds and Guaranteed Income Certificates (GICs).
Dividend stocks that offer regular dividend hikes could be considered excellent hedges against inflationary environments. A security that pays you increasing shareholder dividends can help you create a passive income stream that can keep pace with or even beat rising inflation rates over the years.
That is where Canadian Dividend Aristocrats can come in as good investments for you to consider if you want to beat inflation. Today, I will discuss two Canadian dividend stocks that have a reputation for delivering growing shareholder dividends that you could consider for this purpose. It’s important to choose industries that Canada is known for being strong for, which is why I’ll talk about one bank stock and one energy stock.
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Bank of Nova Scotia
The Bank of Nova Scotia (TSX: BNS)(NYSE: BNS) is one of the Big Six Canadian banks, and it is widely considered an excellent dividend stock. The $112.1 billion market capitalization bank boasts strong multinational operations that generate robust cash flows. The banking sector put up a strong performance throughout 2021, and it is pegged to deliver better results in the coming years.
Rising interest rates could improve profit margins for Canadian banks, allowing dividend growth to continue. At writing, Scotiabank stock trades for $91.87 per share, and it boasts a juicy 4.35% dividend yield. The bank stock has increased its payouts for a decade, and it looks well-positioned to continue growing its shareholder dividends for years to come.
Capital Power
Capital Power Corp. (TSX: CPX) is a $4.6 billion market capitalization power generation company in Edmonton. The company develops, acquires, owns, and operates various power generation facilities that provide an essential service to its clients. Like many other power-generation companies, Capital Power uses coal to produce a significant portion of the electricity it generates.
However, the company is investing in developing and acquiring assets to phase out its reliance on coal by 2032. The company is heavily investing in renewable energy assets and storage facilities in its bid to prepare for a greener future.
Capital Power stock trades for $39.47 per share at writing, and it boasts a juicy 5.55% dividend yield. It has been increasing its payouts by an average of 8% since 2017, making it a viable asset to buy and hold to combat rising inflation.
Foolish takeaway
Scotiabank stock and Capital Power stock are two income-generating assets that are well-positioned to deliver long-term wealth growth. Between the capital gains and rising shareholder dividends, these two TSX stocks could be viable holdings for your self-directed portfolio.
In a shaky-looking market, it’s important to choose stocks with strong track records. If you want to create a dividend income portfolio that can beat inflation rates, Scotiabank stock and Capital Power stock could be strong candidates.
