Dividends Aren’t Guaranteed, Yet 3 TSX Stocks Keep Raising Payouts

No company will guarantee dividend payments, but three TSX Dividend Aristocrats will not break their dividend-growth streaks.

| More on:
Growth from coins

Image source: Getty Images

Dividend investing is one of the effective strategies to earn extra money or boost regular income. But with inflation rising at a rapid pace this year, dividend income helps moderate its impact on your purchasing power. However, dividend payments are never guaranteed.

Companies have the sole discretion of sharing a portion of their profits with shareholders through dividends. The board of directors can decide to stop or slash the payouts anytime. It happened in 2020, the first pandemic year, when many companies incurring huge losses had to suspend dividend payments to conserve cash and protect the balance sheet.

Fortunately, the TSX is home to several Dividend Aristocrats. Despite the current headwinds, National Bank of Canada (TSX:NA), Sun Life Financial (TSX:SLF)(NYSE:SLF), and Capital Power (TSX:CPX) are not about to break their dividend-growth streaks.

Big Six bank

National Bank is Canada’s sixth-largest largest lender. This $30.35 billion bank increased its common share recently by 6% to extend its dividend-growth streak to 12 years. The latest announcement follows the 23% hike in late 2021. Also, the payout is a low 32.41%. At $90.23 per share, the dividend yield is 3.97%.

In Q2 fiscal 2022 (quarter ended April 30, 2022), net income rose 11% versus Q2 fiscal 2021. For the first half of this fiscal year, the year-over-year growth is 17%. Laurent Ferreira, NA’s president and CEO, credits the contribution of each business segment for sustaining the bank’s growth.

Notably, the bank’s U.S. specialty finance and international arm reported $152 million in profits, or 18% higher from a year ago. Ferreira said, “We are maintaining our strategic objectives of delivering a high return on equity and ensuring prudent management of risk and regulatory capital.”

Diversified business model    

Sun Life is an interesting pick today, because it trades at a discount (-13.14% year to date). At only $59.90 per share, you can partake of the 4.51% dividend. The $36 billion insurance, wealth, and asset management solutions provider has raised its dividends for seven consecutive calendar years.

In Q1 2022, net income fell 8% to $858 million versus Q1 2021, but it didn’t prevent the insurer from announcing a boost in common share dividends. Its president and CEO Kevin Strain said, “Sun Life delivered solid first-quarter results, driven by the strength of our diversified business model.”

Strain added, “Our capital position remained strong and we are pleased to announce a 4.5% increase in our dividend to $0.69 per common share, reflecting our confidence in meeting our medium-term financial goals.”

Defensive position

Capital Power outperforms the broader market year to date at +17.82 versus -6.97%. Like NA and Sun Life, you can expect growing dividends from this utility stock. Its dividend-growth streak is eight years. At $45.37 per share, the $5.33 billion independent power producer pays a lucrative 4.72%

In Q1 2022, Capital Power’s net income and net cash flows from operations climbed 18% and 101%, respectively, versus Q1 2021. Its president and CEO Brian Vaasjo said, “Our financial results in the first quarter of 2022 exceeded management’s expectations.” Expect the renewable contracted cash flows to increase, as the company continues its expansion in the renewable energy space.

Secure payouts

The three Dividend Aristocrats can form the nucleus of your stock portfolio if you need more secure payouts.

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 Christopher Liew has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

More on Dividend Stocks

Two seniors float in a pool.
Dividend Stocks

TFSA: How to Earn $1,890 in Annual Tax-Free Income

Plunk these investments into your TFSA to earn passive income and avoid the taxman.

Read more »

Engineers walk through a facility.
Dividend Stocks

1 TSX Stock I Wouldn’t Touch With a 10-Foot Pole

AtkinsRéalis (TSX:ATRL) is one TSX stock I'd never invest in.

Read more »

edit Woman in skates works on laptop
Dividend Stocks

3 No-Brainer Stocks to Buy Under $30

These three stocks all offer a huge deal for investors looking for dividends, as well as growth that will last.

Read more »

You Should Know This
Dividend Stocks

How to Convert a $300 Monthly Investment Into $338 in Monthly Income

If you want a certain amount in monthly passive income, invest a similar amount today and leave the rest to…

Read more »

Increasing yield
Dividend Stocks

3 Income Stocks With Big Yields to Consider in April 2024

If you haven’t yet made your March investments, here are three income stocks to buy the dip and lock in…

Read more »

Senior Man Sitting On Sofa At Home With Pet Labrador Dog
Dividend Stocks

RRSP Investors: Don’t Miss Out on This Contribution Hack!

This hack has so many benefits for you -- not just when you put it in your RRSP but for…

Read more »

A red umbrella stands higher than a crowd of black umbrellas.
Dividend Stocks

Passive Income: 2 Safe Dividend Stocks to Own for the Next 10 Years

Dividend stocks such as Manulife and Fortis can help you generate a stable and recurring passive-income stream.

Read more »

Young woman sat at laptop by a window
Dividend Stocks

3 Dividend Stocks Everyone Should Own for the Long Haul

For investors looking for top-tier dividend stocks to buy and hold for the long term, here are three of my…

Read more »