Passive-Income Investors: 3 Stocks for Decades of Dividends

Are you looking for decades of reliable passive income? These three Canadian stocks have an incredible record of safely growing dividends.

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Do you want passive income that you don’t have to worry about? Well, there are no guarantees in the stock market. However, if you pick stocks in very good-quality businesses, you can set yourself up to earn very predictable and reliable passive income from dividends.

Choose passive income quality over quantity

The key to long-term dividend investing is to find stocks that pay well-supported dividends versus buying stocks that just pay high dividend yields. Higher dividend yields tend to price higher risks in the strategy or financials of a stock.

That is why it is crucial to find companies that are both growing their earnings/cash flows and dividends simultaneously. The best companies are those that can retain some income to re-invest in growth and also grow their dividend regularly. Here are three passive-income stocks that can hopefully do that in the coming years and decades.

CNR: A passive income stock for a lifetime

Canadian National Railway (TSX:CNR) is about as good as it gets if you want longevity. This company has been in business for more than 100 years. Its current dividend is 46 times the size it was when it first started paying dividends in 1996! In fact, it has grown its dividend by a 16.3% compounded annual growth rate (CAGR) for the past 20 years!

The company has grown its earnings per share by an 11% CAGR in that time. While its dividend yield is only 2% today, it has a very low 40% payout ratio. This suggests it has ample powder to keep growing its business and raising its dividend over time.

CNR has a new management team that has been very focused on efficiency and maximizing its current network. While rails can be cyclical, top companies like CN have proven to be very enduring over the long term. Any pullback could be an attractive opportunity to buy this quality passive-income stock.

CNQ: Potentially decades of dividends ahead

Canadian Natural Resources (TSX:CNQ) is another reliable long-term stock for passive income. While many consider this a cyclical stock, that hasn’t been the case when it comes to dividends.

This passive-income stock has grown its dividend by a about a 20 CAGR for the past 23 years. Last year, it grew its dividend twice and paid a substantial $1.50 special dividend per share. As of writing, CNQ stock yields 4.6%.

This company is a model of consistency in the Canadian energy patch. It has three decades of reserves that it can produce at an extremely low cost. Frankly, this is one of the best-managed companies in Canada that also happens to pay a very attractive, sustainable stream of passive income.

BIP: Early stages of dividend growth

Brookfield Infrastructure Partners (TSX:BIP.UN) has grown its dividend by a 10% CAGR since 2009. Its dividend today is 250% larger than it was in 2009. That’s a testament to the quality of this business over time.

Even with its solid dividend growth, it still has a 60% payout ratio. This suggests it can fund growth and higher dividends over time. After a decent decline, this passive-income stock trades with a 4.5% yield.

Brookfield operates an array of utility-like businesses (like ports, pipelines, utilities, and cell towers). With this stock you get a diverse set of businesses that generate predictable, mostly inflation-linked earnings.

You also get an extremely smart merger and acquisition strategy that could generate strong returns beyond its organic growth. Overall, this is a great passive-income stock for those wanting decades of dividends ahead.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Robin Brown has positions in Brookfield Infrastructure Partners. The Motley Fool recommends Brookfield Infrastructure Partners, Canadian National Railway, and Canadian Natural Resources. The Motley Fool has a disclosure policy.

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