Whenever the stock market is selling off due to fear and uncertainty picking up, naturally, investors are a lot more cautious when it comes to buying stocks. That’s why in addition to diversifying your money across different industries and companies, you always want to own different types of companies. Top among those companies are Canadian dividend stocks that can boost your passive income.
During stock market sell-offs, higher-risk growth stocks tend to be much more impacted. On the flipside, reliable and defensive dividend stocks are almost always less volatile than the broader market, which helps to protect your capital.
Another benefit of owning Canadian dividend stocks that generate significant passive income is that your investments can still earn you a return in this environment.
That can be key and allow you to put that capital right back to work and buy other high-quality stocks while they trade at a significant discount.
So if you’re looking to boost your passive income today or just looking for reliable Canadian dividend stocks to add to your portfolio, here are two of the best to buy now.
This Canadian dividend aristocrat is one of the best stocks for passive income
If you’re an investor looking to boost your passive income, dividend growth stocks that constantly increase their payouts to investors each year are some of the best to buy. That’s why a high-quality utility stock like Fortis (TSX:FTS) is such a popular investment.
Utility operations are highly reliable and defensive since electricity and gas are so essential to residential and commercial customers. However, Fortis is also well diversified with utility operations all over North America, including parts of the Caribbean. This diversification helps to significantly lower risk.
In fact, the stock is so reliable, and its operations are so robust that you have to go back to 2012 to find a year when Fortis’ revenue didn’t grow year over year. That’s impressive consistency. And what’s even more impressive is that in the one year that sales didn’t manage to grow over the last decade, they only fell by 2.2%.
Earnings power
Furthermore, and more importantly for investors, is that Fortis’ normalized earnings per share (EPS) growth has had essentially the same consistency. In the last decade, Fortis’ EPS increased in all but two years. And both times when its normalized EPS declined, it was by 2% or less.
In fact, over the last decade, its normalized EPS has grown by 65%, an impressive growth rate for such a safe and reliable investment like Fortis. It’s not the fastest-growing stock on the market, but its consistent growth in earnings allows it to be much more reliable. Notably, it leads to consistent dividend increases each year.
So it’s clear why Fortis has one of the longest dividend growth streaks in Canada at 49 consecutive years of dividend increases.
Plus, with increasing interest rates pushing yields higher over the last year, investors can now buy Fortis and lock in a yield upwards of 4%. Consider that from late 2018 until late 2022, Fortis’ yield was below 4%, except for briefly at the start of the pandemic. That higher yield is creating an excellent buying opportunity today.
Therefore, buying Fortis stock today while it’s slightly undervalued and offers a compelling yield is a deal for passive income seekers.
A top Canadian telecom stock
In addition to Fortis, another excellent dividend stock that also offers attractive dividend growth is BCE (TSX:BCE).
Although a telecom stock isn’t quite as safe as a regulated utility like Fortis, BCE is still a top Canadian stock to buy for passive income generation.
Having access to quality communication services is crucial these days, which makes internet services as well as BCE’s wireless operations essential.
And because having access to these services is essential for so many consumers and businesses, it makes much of BCE’s revenue robust and reliable.
Therefore, it’s no surprise that BCE is another impressive Canadian dividend aristocrat. The Canadian stock has increased the passive income it pays to investors for 14 consecutive years. BCE stock currently offers a yield of roughly 6.5%.
So if you’re looking to boost your passive income or just buy reliable Canadian stocks, BCE is an ideal investment to buy and hold for years.
