Investing in stocks with rising dividend payouts is a great strategy for those seeking passive income and excellent total returns over the long term.
Of course, building an income-producing, self-directed portfolio is easier said than done. Canadian investors have access to a vast array of dividend-paying TSX stocks. Thus, finding and making investments in high-quality dividend shares isn’t easy when there are so many great options to choose from.
With that said, there are certain stocks with defensive business models and high, growing yields, that I think are worth considering right now. Here are two of my top picks right now for those seeking long-term passive-income generation.
Fortis
Fortis (TSX: FTS), provides regulated electric and gas utility services in the U.S. and Canada. With over 3.4 million gas and electricity consumers, this firm’s business model is highly defensive.
Accordingly, Fortis has transformed its extremely stable cash flows into rising dividend payouts over time. In fact, over the past five decades, the company hasn’t missed an opportunity to raise its dividend.
The most recent dividend hike came this past quarter. Fortis announced a dividend payment of $0.565 per share, increasing its distribution 6%. Thus, this is the 49th consecutive such hike, putting Fortis firmly in the Dividend Aristocrat camp.
At the time of writing, Fortis stock yields approximately 4.2%. That’s roughly on par with where medium-term bonds are, and given the company’s dividend-growth trajectory, there’s plenty of reason to hold this stock for those seeking long-term passive income.
Enbridge
Another top dividend stock I think is worth buying at these levels is leading pipeline operator Enbridge (TSX: ENB). Indeed, Enbridge’s value as an extremely defensive operator in a high-need business with stable cash flows is underrated. Additionally, I think the company’s 6.5% dividend yield is among the best in the business.
The company’s stock price performance has been relatively solid in recent months, with ENB stock making up much of its losses from its October lows. This has reduced the company’s relative yield. However, like Fortis, Enbridge has continuously raised its distribution over time. While I only expect the company to hike its distribution in the low-single-digit percentages moving forward, the company’s upfront yield is very enticing for those seeking immediate return on investment.
The company’s importance in providing North American energy independence should not be understated. Indeed, given the geopolitical situation right now, Enbridge remains a company that’s overlooked, but essential. Thus, I view this stock as one long-term investors seeking passive income should consider right now.
