Dividend stocks are undoubtedly a great avenue to generate passive income. However, investors should take caution before investing, as dividends are not guaranteed. Nonetheless, the TSX has several top Canadian dividend stocks that continue to pay and grow their dividends, regardless of the market conditions.
Thus, investors should focus on stocks with a solid track of dividend payment and growth. Further, these companies should have growing earnings and cash flow streams.
Against this backdrop, I’ll discuss three Canadian stocks that are dividend powerhouses. These companies have consistently increased their payments each year. Moreover, they have increased visibility over their future payouts. Let’s begin.
TC Energy (TSX:TRP) is an energy infrastructure company with a solid track record of stellar dividend payment and growth. Its regulated and contracted assets witness a high utilization and generate most of its earnings and cash flows that support its dividend payments.
It’s worth highlighting that TC Energy has consistently enhanced its shareholders’ returns through higher dividend payments and growth. For instance, it has increased its dividend for 23 consecutive years. Furthermore, its dividend grew at an average annualized rate of 7% during the same period.
By investing in TC Energy stock near the current levels (closing price of $53.77 on March 10), investors can earn a lucrative yield of 6.92%. Further, this high yield is well covered through its utility-like business model and a growing regulated and contracted assets base. Additionally, a $34 billion secured growth projects bode well for its future earnings and dividend payments. Given its strong fundamentals, TC Energy plans to increase its dividend by 3-5% annually, making it a solid passive-income stock.
Speaking of top passive-income investments, Canadian utility company Fortis (TSX:FTS) is a must-have stock in your portfolio. This electric utility company has a strong dividend growth history thanks to its resilient business model, regulated asset base, and predictable cash flows.
Impressively, it has increased its dividend for 49 consecutive years, reflecting a growing rate base. Meanwhile, Fortis projects a 4-6% growth in its annual dividend through 2027. This dividend forecast is backed by the expansion of its rate base, which the company expects to grow at an annualized rate of 6.2% over the next five years.
Overall, Fortis’s solid business model, multi-billion-dollar capital plan and visibility over its future payouts position it well to deliver solid shareholders’ returns. It offers a well-covered dividend yield of 4.24%.
Enbridge (TSX:ENB) is another reliable stock to generate a reliable passive income in all market conditions. The company transports oil and natural gas and generates resilient distributable cash flow per share, which drives its dividend payments.
The company raised its dividend at an average annualized growth rate of 10% in the past 28 years. Moreover, it offers an attractive dividend yield of 6.78%.
Its diversified revenue streams, contractual arrangements, and continued capital investments in conventional and renewable assets bode well for future cash flows and dividend payouts. Furthermore, this energy company’s payout ratio of 60-70% is sustainable, making it a solid stock to generate reliable passive income for decades.