3 Safe Dividend Stocks for Steady Income

These companies have strong earnings growth potential and have consistently raised dividends for more than 10 years.

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If you plan to build a reliable income portfolio, add high-quality dividend-paying stocks. While creating an income-generating portfolio, it’s essential to look at a company’s earnings potential. Further, it’s prudent to look at its dividend payment and growth history. 

With a reliable income stream in the backdrop, let’s look at a few Canadian corporations with strong visibility over future earnings. Moreover, these companies have been paying and increasing dividends for more than a decade. 

Algonquin Power & Utilities

Let’s begin with Algonquin Power & Utilities (TSX:AQN)(NYSE:AQN), which has increased its dividend for 11 years. It’s worth noting that Algonquin Power operates a low-risk business, while its regulated assets generate predictable cash flows. Thanks to its ability to consistently grow its earnings, Algonquin Power returns a substantial amount of cash in the form of higher dividend payments. 

This utility company’s robust investment pipeline is expected to drive its high-quality earnings base, indicating that Algonquin Power could continue to grow its dividend at a healthy pace. It projects the rate base to grow at a CAGR of 14.6% through 2026, resulting in an annualized growth of 7-9% in its adjusted earnings during the same period. 

Overall, its high-quality assets, long-term contracts, growing rate base, strong dividend payment history, and visibility over future earnings make Algonquin Power & Utilities a reliable income-generating stock. Further, the expansion of its renewables capacity and opportunistic acquisitions bode well for future growth. It offers a dividend yield of 4.5%, while its payouts are sustainable in the long term.  


Next up is Enbridge (TSX:ENB)(NYSE:ENB), which has increased its dividend uninterrupted for 27 years. Its diversified cash flow streams, contractual arrangements, and inflation-protected revenues have led Enbridge to grow its dividend at a CAGR of 13% since 2008. 

With the strong energy demand, recovery in its mainline volumes, ongoing strength in its base business, and multi-billion secured capital program, Enbridge is positioned well to grow its distributable cash flows and pay a higher dividend. 

Notably, Enbridge expects its distributable cash flow per share to increase by 5-7% per annum in the medium term. This implies that its dividend could grow in the mid-single-digit range. ENB offers a dividend yield of more than 6%, which is highly reliable considering its solid cash-generating capabilities and long dividend payment history. 


The final stock on my list is Fortis (TSX:FTS)(NYSE:FTS). Fortis increased its dividend for 48 consecutive years and is among the top stocks to generate steady income amid all market conditions. Its conservative business and high-quality regulated assets generate solid cash flows and support higher dividend payments. 

Fortis operates multiple regulated utility businesses that account for 99% of its earnings, indicating that its payouts are well protected. Meanwhile, it expects its rate base to grow at a CAGR of 6% in the medium term, which would expand its earnings base. Thanks to the rate base growth, Fortis sees a 6% annual growth in its dividend through 2025. 

Fortis’s strong dividend payment history, predictable cash flows, and visibility over future dividend growth make it an attractive income stock. 

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 recommends Enbridge and FORTIS INC.

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