Dividend Aristocrats: The Best Stocks for Beginners

Dividend Aristocrats like BCE Inc. (TSX:BCE)(NYSE:BCE) should be on every beginner’s radar.

| More on:
Golden crown on a red velvet background

Image source: Getty Images

It’s never easy being a beginner. It’s even more overwhelming when you’re trying to invest for the first time during a market downturn. With stock prices falling and a potential recession on the horizon, new investors need to seek out stocks that strike the perfect balance between risk and reward. 

I believe Dividend Aristocrats strike this balance. Here’s why these special dividend stocks should be on your watchlist for the rest of 2022. 

What is a Dividend Aristocrat?

A Dividend Aristocrat is a stock that consistently raises dividends for a prolonged period. If a company can raise shareholder rewards every year for several years, it’s likely to deliver exceptional returns over the long term. Such companies have a combination of high pricing power, excellent management, and favourable economics. That’s why your portfolio needs at least some exposure to Dividend Aristocrats. 

Here are a few Dividend Aristocrats that deserve your attention right now. 

Enbridge

Pipelines are, perhaps, the least-volatile segment of the energy market. Setting up infrastructure is expensive and usually takes several years, but once the network is active, it’s a cash flow machine. That’s why Canada’s major pipeline operators are some of the best dividend stocks on the market. 

The biggest player in the sector is Enbridge (TSX:ENB)(NYSE:ENB). The company’s network of oil and gas pipes has seen tremendous volume this year as North America rebounds from the pandemic. In fact, the volume has jumped higher than expected as Canada and the U.S. export energy to Europe to plug the gap left by Russia. 

Enbridge is on track for steady cash flow growth over the next few months. In fact, the management team expects dividends to rise 5-6% every year for the next few years. That would extend Enbridge’s 67-year track record of consistent dividend growth. 

Investors seeking a safe passive-income opportunity should certainly keep an eye on this Dividend Aristocrat. 

BCE

The recent Canada-wide network outage should make it clear that telecom companies are essential utilities. Everything from bike share hubs to the emergency 911 service relies on a network dominated by three big players. 

BCE (TSX:BCE)(NYSE:BCE) is the biggest of them all. Canada’s largest telecom giant has never suffered a nationwide outage. It’s also on track to complete significant upgrades to the network that should improve speed and security for millions of subscribers. Put simply, BCE has a chance to further entrench its market dominance now. 

This position has delivered remarkably stable cash flows for decades. BCE has consistently raised its dividend since 1949. At the moment, BCE stocks offers a 5.8% dividend yield and trades at just 19 times earnings per share. If you’re a beginner with $1,000 to invest, this telecom giant should be on your radar. 

Bottom line

Dividend Aristocrats — companies with consistent dividend growth — are a powerful tool for wealth creation. New investors should focus on these stocks for steady returns. 

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 Vishesh Raisinghani has no position in any of the stocks mentioned. The Motley Fool recommends Enbridge.

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 »