Many investors dream of having their portfolios pay for their day-to-day lives. That’s what’s referred to in the financial space as achieving financial independence. When someone has achieved that, they don’t necessarily need to rely on their job as a primary source of income. That could free someone’s time, allowing them to focus on things they’re more passionate about. It could mean being with your family, travelling, or picking up a new hobby.
One way that investors could achieve financial independence is by investing in dividend stocks. These are stocks that pay investors for holding shares of that company in their portfolio. In this article, I’ll discuss three dividend stocks that are total legends.
One of the best dividend stocks around
When it comes to Canadian dividend stocks, very few are as impressive as Fortis (TSX:FTS). This company has managed to increase its dividend in each of the past 49 years. That makes it a long-time Canadian Dividend Aristocrat and gives it the second-longest active dividend-growth streak in the country. For those that are unfamiliar, Fortis provides regulated gas and electric utilities to more than three million customers across Canada, the United States, and the Caribbean.
Because of the nature of Fortis’s business, its revenue is highly predictable. That allows the company to plan ahead for future increases in its dividend distribution. Fortis has already announced its plans to continue raising its dividend at a rate of 4-6% through to 2027. If you’re in the market for a steady business with a reliable dividend, Fortis should be in consideration.
This company should be the backbone of your portfolio
The railway industry has shaped the Canadian economy for over a century. Serving as the backbone of the economy, businesses have been able to ship goods across this vast country using the railway. What continues to make these companies so attractive is the fact that there currently isn’t a viable alternative to transport large amounts of goods over long distances if not via rail. With that said, Canadian National Railway (TSX:CNR) could make an excellent stock to hold in a dividend portfolio.
This company has managed to increase its dividend in each of the past 26 years. That makes it one of only 11 TSX-listed companies to currently achieve that feat. In addition to its long history of raising its dividend, it should be noted that Canadian National’s dividend has grown at a fast rate over the past 26 years. Over that period, this company’s dividend has grown at a compound annual growth rate of about 15.7%.
Despite that high growth rate, Canadian National’s dividend-payout ratio stands at 39%. That suggests that the company could continue to comfortably raise its dividend over the coming years.
Nearing two centuries of dividend payments
For those that are paying attention, you may have noticed that Fortis and Canadian National operate very different businesses. However, where these two are very similar is that they’re both blue-chip companies. That’s a term used in the financial space for companies that are well established and lead their respective industries.
Another blue-chip company that investors should consider buying for its dividend is Bank of Nova Scotia (TSX:BNS). Admittedly, this stock doesn’t boast the same kind of dividend-growth streak as the two previous stocks. However, Bank of Nova Scotia blows them away in terms of how long it’s been paying a dividend. This company first started paying its shareholders a dividend in 1833. Since then, it has never missed a dividend payment. That represents 189 years of continued dividend distributions! As one of the Big Five banks, I believe Bank of Nova Scotia could continue to pay shareholders for the foreseeable future.