Whether you have been investing in the stock market for years or are new to it, dividend investing is an excellent way to set yourself up for financial independence. Provided you make the right bets, investing in even the most boring stocks can unlock substantial long-term wealth growth.
Dividend investing allows you to put your money to work in the market to generate a passive income through quarterly or monthly payouts from dividend-paying companies. If you are a new investor, you might feel tempted to invest in stocks with high-yielding payouts. As attractive as it might seem, investing in outsized dividend-yielding stocks entails significant risk.
Safe, reliable, and high-quality companies offer a better prospect for investors seeking sustainable wealth growth through dividend investing. To this end, I will discuss three TSX stocks you can add to your portfolio.
Fortis
Fortis (TSX: FTS) is a powerhouse among Canadian dividend stocks. While a boring stock in terms of price movement on the stock market, Fortis stock is a passive-income seeker’s dream.
The $26.77 billion market capitalization utility holdings company is a Canadian Dividend Aristocrat, boasting a 49-year dividend-growth streak. Fortis stock does more than pay its shareholder dividends regularly. It has increased its payouts for almost half a century.
Fortis owns and operates several electricity and natural gas electricity businesses across Canada, the U.S., Central America, and the Caribbean. It generates most revenue from highly rate-regulated and long-term contracted assets.
This way, Fortis creates predictable cash flows that allow it to comfortably fund its growing shareholder dividends. As of this writing, Fortis stock trades for $55.74 per share, boasting a juicy 4.05% annualized dividend yield it pays out quarterly.
Northland Power
Green and green energy is the future of the energy industry, and renewable power stocks like Northland Power (TSX: NPI) are at the forefront of the green revolution.
The $8.37 billion market capitalization company is a power producer that develops, builds, owns, and operates a globally diversified portfolio of clean power infrastructure assets.
In particular, Northland Power has a unique focus on developing and operating offshore wind facilities, a rapidly growing segment in the renewable energy industry.
The company recently closed in on securing several new offshore wind projects, simultaneously signing its first joint venture to develop a facility in Asia.
While the developments will take a long time to bear fruit, it offers investors the chance to invest in a stock with substantial long-term growth potential. As of this writing, Northland Power stock trades for $33.47 per share, boasting a 3.59% annualized dividend yield it pays out quarterly.
Canadian National Railway
Canadian National Railway (TSX: CNR) is another Canadian Dividend Aristocrat that holds its place as a staple investment for many income-seeking investors.
While it does not pay massive dividends, boasting only a 2.01% dividend yield, it has grown its payouts by an annualized 14.5% for more than 10 years. Compared to its payouts in 2012, its dividend is almost three times what it paid its investors just over a decade ago.
CN Railway is a massive $106.07 billion market capitalization railway company, boasting an unrivaled railway network connecting Canada and the Midwestern and southern United States. The current economic uncertainty prompted its management to give a weaker-than-anticipated guidance for 2023.
However, it expects earnings growth to be around the same as in 2022. Experts believe these are conservative figures by the company’s new management focusing on maximizing consistency, efficiency, and profitability. As of this writing, CN Railway stock trades for $157.22 per share.
Foolish takeaway
High-quality businesses with solid fundamentals and steadily growing cash flows offer an excellent opportunity for investors seeking income-generating assets they can buy and hold for decades. Fortis stock, Northland Power stock, and CN Railway stock are three TSX dividend stocks you can consider for this purpose.
