2 of the Best Dividend Stocks to Buy for Growing Passive Income

If you’re building a long-term portfolio, these two dividend stocks are some of the best investments to buy for growing passive income.

| More on:
potted green plant grows up in arrow shape

Image source: Getty Images

Often, investors look for dividend stocks that offer the highest yield. However, while a high yield can certainly be attractive and increase the passive income you earn today, as a long-term investment, dividend stocks that offer large and consistent dividend increases will be some of the best to buy for passive-income seekers.

Investing is all about buying and holding stocks for the long run. And even though dividend stocks allow you to receive some cash today, the true power of dividend stocks comes from the compounding effects that are realized over time.

Therefore, when you can find dividend stocks that will consistently grow their dividend payments and do so in a meaningful way, even if the yield is lower today, these stocks could be paying you out much more capital in the years to come.

So, if you’re a dividend investor looking to grow your passive-income stream, here are two of the best dividend stocks to buy now.

Top Canadian utility stocks offer attractive passive-income growth

Many Canadian utility stocks are some of the best investments to make for reliable and consistently growing passive income. In fact, Canadian Utilities (TSX:CU) has not only been a reliable dividend payer for investors, but it’s also increased its dividend for an impressive 50 straight years — the longest streak in Canada.

Canadian Utilities is such a reliable stock because it owns a portfolio of energy infrastructure assets diversified all over the world. The company offers services such as electricity transmission and distribution, natural gas transmission and distribution, energy storage, industrial water solutions and more.

These are highly defensive services, and by diversifying geographically, Canadian Utilities helps to lower its risk even further. And because it’s such a reliable, low-risk investment, on top of the fact that it has such predictable revenue and cash flow, Canadian Utilities is one of the best dividend stocks you can buy for consistently growing passive income.

In just the past five years, it’s increased its dividend payments by over 24%. And today, the stock offers an attractive yield of more than 4.8%.

A top Canadian telecom stock

Another high-quality and highly reliable company that’s one of the best dividend stocks you can buy is BCE (TSX:BCE)(NYSE:BCE).

BCE is a top passive-income generator because it has such a massive business; plus, much of the services it offers are essential, which makes its business highly defensive. Furthermore, BCE owns tonnes of long-life assets that earn the company billions in cash flow each quarter.

Since 2017, and including through the pandemic, BCE has managed to generate over $3 billion in free cash flow every single year.

And although it doesn’t have the same lengthy dividend-growth streak as Canadian Utilities, BCE has increased its dividend every year for over a decade now and continues to be one of the best Canadian dividend stocks to buy for growing passive income.

Over the past five years, it’s increased its dividend by over 28%. Furthermore, after pulling back in the recent stock market selloff, BCE now offers a yield that’s upwards of 6.3%

So, if you’re a passive-income seeker looking to buy top-notch long-term stocks in this environment, then a high-quality dividend-growth stock like BCE is one of the best to consider.

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 Daniel Da Costa has positions in BCE INC. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

More on Dividend Stocks

A close up image of Canadian $20 Dollar bills
Dividend Stocks

TFSA Investors: Put $45,000 in These Top TSX Stocks and Watch Your Passive Income Roll In

Are you looking to retire early? Here are a few ideas about how your TFSA could earn a passive-income stream…

Read more »

Human Hand Placing A Coin On Increasing Coin Stacks In Front Of House
Dividend Stocks

Love Passive Income? Here’s How to Make Plenty of it as a Real Estate Investor

You could definitely create passive income by investing in pure real estate, but you could make just as much, if…

Read more »

Make a choice, path to success, sign
Dividend Stocks

2 High-Yielding Dividend Stocks You Can Buy and Hold for Years

These two high-yielding dividend stocks can be the perfect addition to your portfolio, as the bear market causes payout yields…

Read more »

Retirees sip their morning coffee outside.
Dividend Stocks

TFSA Wealth: How to Turn $88,000 Into $1 Million for Retirement

Canadians can use the TFSA to hold a basket of diversified equity investments, allowing you to turn a $88,000 investment…

Read more »

Electricity high voltage pole and sky
Dividend Stocks

Better Buy: Algonquin Stock, Brookfield Renewable, or Fortis?

Algonquin Power stock, Brookfield Renewables, and Fortis are well known Canadian utility stocks. But which one is a better buy…

Read more »

Dollar symbol and Canadian flag on keyboard
Dividend Stocks

3 Canadian Gems to Buy Amid Rising Interest Rates

Here are top TSX stocks that could keep outperforming broader markets.

Read more »

data analyze research
Dividend Stocks

TFSA: Invest $29,000 in These 3 Stocks and Earn $515 Each Month in Passive Income in 2023

The benefits of the TFSA can be leveraged to hold a basket of dividend stocks and generate a stream of…

Read more »

woman data analyze
Dividend Stocks

2 Stocks to Buy and Then Never Sell

Conservative investors who seek capital protection and long-term price appreciation should dig deeper into CNR and IFC stocks.

Read more »