Want Easy Passive Income? Go With These 2 Canadian Dividend Aristocrats

Canadians can earn easy passive income from these two TSX dividend aristocrats to minimize the impact of rising inflation on their purchasing power.

| More on:
grow money, wealth build

Image source: Getty Images

Another rate hike is coming in September 2022 as the Bank of Canada continues to rein in inflation. The policymakers’ forecast was for inflation to return to 2% by year-end 2024 to avoid recession. Doug Porter, the chief economist at BMO Capital Markets, said the central bank wouldn’t cut interest rates anytime soon because it has a long-term battle on its hands.

Josh Nye, a senior economist at Royal Bank of Canada, agrees, “Even with the economy likely to see a mild recession next year, we think it will take until 2024 to get inflation back to target, or reasonably close.” Meanwhile, investors should take note of the slow grind to bring down inflation.

A ‘real risk’ to purchasing power

One of the terrible effects of inflation is that it’s a ‘real risk’ to your purchasing power over time. Your dollar can buy fewer goods and services than it did during the pandemic in 2020. Holding cash is okay but it will lose value eventually if it remains idle.

The advice of financial experts is to purchase or stay invested in dividend aristocrats to earn passive income or boost regular income.  Nearly all primary sectors of the TSX have dividend aristocrats. However, Canadian Utilities (TSX:CU) and TC Energy (TSX:TRP)(NYSE:TRP) are suitable choices for their lengthy dividend growth streaks.

Lone dividend king

Canadian Utilities is the only dividend king so far in Canada. The $11.2 billion global utility and energy infrastructure company has increased its common share dividend every year for the past 50 years. The goal is to grow dividends in tandem with sustainable earnings growth. Moreover, this growth is linked to the growth of regulated and long-term contracted investments.

The highly contracted and regulated earnings base of Canadian Utilities forms the foundation for continued dividend growth. According to management, it will continue to grow the business through a $3.5 billion capital plan (2022 to 2024). CU will spend the money on regulated utility and commercially secured energy infrastructure capital growth projects.

About 94% or $3.3 billion will go to investments in regulated utilities. The capital investment should contribute significant earnings and cash flows while creating long-term value for shareowners. If you invest today, the share price is $41.42 (+16.89% year to date), while the dividend yield is 4.29%.

Utility-like business model

TC Energy’s dividend growth streak is equally impressive. The energy stock has increased its dividend every year since 2000 despite the sector’s volatile nature. Because of the elevated oil prices today, current investors enjoy a 15.8% year-to-date gain in addition to the generous 5.5% dividend yield. Its share price of $66.38 could still appreciate.

Management intends to continue expanding, extending, and modernizing the existing natural gas pipeline network. TC Energy’s critical energy infrastructure assets connect North America’s premier basins to liquefied natural gas (LNG) export facilities. The $1 billion company has a secured capital program worth $28 billion, and it expects to sanction around $5 billion of projects annually throughout the decade.

Easy passive income

Dividend aristocrats are must-own stocks for stable and increasing payouts regardless of the economic environment. Canadian Utilities and TC Energy are perfect hedges against inflation as your investment will generate easy passive income every quarter.

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

A Canada Pension Plan Statement of Contributions with a 100 dollar banknote and dollar coins.
Dividend Stocks

Average CPP Benefits at 60, 65, and 70 in 2024: What to Expect

You can supplement your CPP benefits by holding Fortis Inc (TSX:FTS) stock in an RRSP.

Read more »

A worker gives a business presentation.
Dividend Stocks

Want an Extra $1,000 in Annual Income? Invest $15,000 in These 3 Unstoppable Stocks

Given their solid underlying businesses, excellent cash flows, and consistent dividend payouts, these three TSX stocks could boost your passive…

Read more »

A stock price graph showing growth over time
Dividend Stocks

2 TSX Stocks With Great Dividend Growth to Buy Now

Top TSX dividend stocks are on sale.

Read more »

Paper Canadian currency of various denominations
Dividend Stocks

Passive Income! My Top 2 Dividend Stocks for New Investors

These two top Canadian dividend stocks could help new investors create a reliable source of passive income that could last…

Read more »

Electricity high voltage pole and sky
Dividend Stocks

Fortis Stock: Should You Buy, Sell, or Hold Today?

Fortis is down 15% from the 2022 high. Is the stock now oversold?

Read more »

View of high rise corporate buildings in the financial district of Toronto, Canada
Dividend Stocks

Top 2 REITs to Buy Before Yields Fall Along With Interest Rates

Canadian Apartment Properties REIT (TSX:CAR.UN) is just one REIT that could gain when rates really start to tumble.

Read more »

Printing canadian dollar bills on a print machine
Dividend Stocks

Where to Invest $10,000 in June

Canadian small caps are widely outperforming the TSX, and REITs, including Dream Industrial REIT (TSX:DIR.UN) could recover as interest rates…

Read more »

edit Real Estate Investment Trust REIT on double exsposure business background.
Dividend Stocks

Finally, This REIT ETF Could Be the Best Buy of 2024

This ETF is finally looking up, with enormous returns already in 2024. And a high dividend yield that should only…

Read more »