My 3 Favourite TSX Dividend Stocks Right Now

These TSX stocks have been paying dividends for decades and have growing earnings bases to support future payouts.

| More on:
edit Business accounting concept, Business man using calculator with computer laptop, budget and loan paper in office.

Image source: Getty Images

We invest in dividend stocks to earn consistent passive income irrespective of where the market goes. Further, they chug along nicely and deliver solid returns in the long term. 

However, not all dividend stocks have the potential to deliver regular earnings for decades. So, how should investors find a top dividend-paying stock? One way is to look at a company’s dividend payment and growth history. Further, investors should also look at the corporation’s future earnings potential. 

If you plan to add a few top-quality dividend stocks to your portfolio, here are my three favourite ones.

Fortis

Fortis (TSX:FTS)(NYSE:FTS) is one of the best and safest stocks for investors to generate passive income. The reasons are its solid dividend-growth history of 48 years, clear visibility over future payouts, rate-regulated assets, and a growing earnings base (its earnings have a CAGR, or compound annual growth rate, of 5%).

It has 10 low-risk utility businesses that generate predictable cash flows. Further, through its $20 billion capital plan, Fortis expects to expand its rate base, which will support revenue and earnings growth. Fortis projects its rate base to increase at a CAGR of 6% through 2026. Meanwhile, it expects to grow its dividend at a similar pace through 2025. 

Fortis’s diversified regulated portfolio, conservative business, growing renewable power-generation capacity, and robust dividend payment and growth history make it a solid investment. Further, investors can earn a well-protected dividend yield of 3.9%. 

Scotiabank

Top Canadian banks should be on your radar to generate uninterrupted passive income. For instance, most of them have been growing their earnings at a decent pace and paying dividends for several decades. Among top Canadian banks, Scotiabank (TSX:BNS)(NYSE:BNS) is an attractive play due to its high yield and ability to grow earnings. 

Scotiabank has been paying a regular dividend since 1833. Meanwhile, its dividend has a CAGR of 6% in the past decade. Its solid dividend growth is backed by the continued growth in its earnings (Scotiabank’s earnings have increased at a CAGR of 5% in the past decade). 

Its exposure to top banking markets and growing market share will support its growth. Meanwhile, its ability to grow loans and deposits volumes, solid credit quality, and strong balance sheet will support its earnings and dividend payments. Meanwhile, Scotiabank offers an attractive dividend yield of 6.1%.

Enbridge

Enbridge (TSX:ENB)(NYSE:ENB) should be part of your passive-income portfolio. Its stellar dividend growth history (277 years), long track record of dividend payment (over 67 years), and highly diversified cash flow streams (over 40 cash streams) make it one of my favourite stocks to earn worry-free income. 

Enbridge has grown its EBITDA (earnings before interest, taxes, depreciation, and amortization) at a CAGR of 14% since 2008. This has driven its distributable cash flow (DCF) per share and dividend payments.

Its solid asset mix (conventional and renewable), high-quality customer base (95% of its customers are investment grade), contractual arrangements, and inflation-protected EBITDA (80% of EBITDA has inflation protection) bode well for future dividend growth. Meanwhile, Enbridge pays a stellar dividend yield of 6.7%. 

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 BANK OF NOVA SCOTIA, Enbridge, and FORTIS INC. The Motley Fool has a disclosure policy.

More on Dividend Stocks

analyze data
Dividend Stocks

Telus Stock Rose 1% in November: Is it a Buy Today?

After a mostly flat November, is Telus one of the best stocks to buy in December, as we head into…

Read more »

money cash dividends
Dividend Stocks

How to Generate $500 in Passive Income Each Month

Instead of letting the stock market control your earnings, take control. Earn stable passive income with this strategy.

Read more »

Dividend Stocks

2 of the Best Stocks to Buy for Fast-Growing Passive Income 

In this economy, you need a passive income that grows fast enough to beat inflation in any situation. These two…

Read more »

edit Business accounting concept, Business man using calculator with computer laptop, budget and loan paper in office.
Dividend Stocks

2 Top TSX Stocks to Buy Now for Passive Income

These top TSX stocks are industry leaders and have good track records of dividend growth.

Read more »

clock time
Dividend Stocks

2 Dividend Stocks to Set and Forget

I guarantee you haven't considered these dividend stocks as ones you can set and forget for decades, for a massive…

Read more »

Target. Stand out from the crowd
Dividend Stocks

1 Oversold Dividend Stock (With a 10% Yield) I’d Buy This December

Fiera Capital is a quality TSX stock that pays investors a handsome dividend yield. Here's why this TSX dividend stock…

Read more »

data analyze research
Dividend Stocks

3 Unstoppable Canadian Dividend Stocks to Buy Before 2023

These three dividend stocks have soundly beaten the TSX in 2022. Here's why they could continue to outperform in 2023.

Read more »

Golden crown on a red velvet background
Dividend Stocks

3 Underrated Dividend Stocks That Are Aristocrats in the Making

These three dividend stocks may not be Dividend Aristocrats yet, but it is highly likely they will be given their…

Read more »