One of the biggest advantages of owning TSX dividend stocks is that in addition to all the capital gains potential they offer, they also return passive income to investors.
Earning passive income may not seem like a big deal, but over time, it can have a substantial impact on your portfolio.
Dividend stocks return investors cash quarterly or even monthly, which allows you to rebuild your capital quicker and reinvest that capital to take advantage of compound interest.
Furthermore, when the market is selling off, this passive income you receive may be some of the only gains for a while, and that cash can go a long way if you reinvest when many stocks are undervalued.
With that in mind, if you’re looking to buy top TSX stocks in December, here are two of the best dividend growth stocks to consider for consistently increasing passive income.
This utility stock is one of the best companies to buy on the TSX for consistently growing passive income
There’s no question that some of the best TSX stocks to buy in general — especially if you’re looking to earn passive income — are stocks that make up the Canadian Dividend Aristocrats list.
It’s no surprise that many Canadian utility stocks are Dividend Aristocrats, and the longest-standing company with a dividend-growth streak of 50 years is Canadian Utilities (TSX:CU).
Utility stocks are well known to be reliable and defensive investments. But any company that consistently increases its payout for 50 years has also proven what a high-quality operator it can be.
Canadian Utilities owns both electricity and natural gas utilities and has assets diversified all over the world. Furthermore, it also has exposure to electricity generation as well as a storage and industrial water segment.
Therefore, in addition to being a low-risk utility that’s ideal for passive income, Canadian Utilities is also in an excellent position to take advantage of growth opportunities over the coming years, as the world continues its transition to low-carbon energy.
Even if you aren’t primarily looking to earn passive income, Canadian Utilities is still one of the best TSX stocks to buy in December. The stock currently trades more than 10% off its 52-week high and, as of Monday’s close, offers an attractive dividend yield of 4.8%.
A top Canadian railroad with over a quarter-century of dividend increases
Another impressive Dividend Aristocrat and one of the best TSX stocks you can buy and hold for decades in your portfolio is Canadian National Railway (TSX:CNR).
CNR is one of the best stocks to buy because it’s highly defensive, consistently growing and has a massive footprint across North America, making it crucial to the economy. With over 18,600 miles of railroads spanning the continent, CNR offers access to major ports on the Atlantic Ocean, Pacific Ocean, the Great Lakes, and the Gulf of Mexico.
Furthermore, because railroads are some of the most efficient modes of transportation, stocks like CNR have a significant competitive advantage.
Therefore, although CNR doesn’t pay nearly as much of a dividend as Canadian Utilities, currently offering a yield of just 1.7%, it’s still one of the best TSX stocks to buy in December.
Not only has it increased its dividend for over a quarter century, but over the last decade, investors have earned a total return of over 350%, or a compound annual growth rate upwards of 16.5%.
Therefore, if you’re looking for a reliable core portfolio stock that can grow consistently over the long haul and offers growing passive income, CNR is easily one of the best TSX stocks to buy in December.
