The stock market could stay volatile in 2023 due to persistently high inflation and increasing interest rates. While the macro environment remains uncertain, investors can turn to Canadian dividend stocks to earn a steady income, regardless of where the market goes.
Thankfully, the Canadian stock exchange has several fundamentally strong dividend-paying stocks that one can rely upon for earning steady passive income. Against this backdrop, let’s look at four stocks with stellar dividend payment histories and a growing earnings base to support their future payouts.
Enbridge (TSX:ENB), without a doubt, is a must-have income stock. The company has been paying a regular dividend for about 68 years. Moreover, the energy infrastructure company has increased its quarterly dividend for 28 consecutive years. It delivers a quarterly dividend of $0.887, translating into a high yield of 6.75%.
This big dividend-paying stock has a resilient business that generates solid cash flows. Its diversified cash streams, contractual arrangements to lower price and volume risks, and inflation-protected earnings position it well to deliver solid distributable cash flows and dividend payments.
Meanwhile, its investments in conventional and renewable energy position it well to capitalize on the long-term energy demand. While its payout ratio of 60-70% of its distributable cash flows is sustainable, its multi-billion-dollar capital project will likely cushion its future earnings and dividend payments.
TC Energy (TSX:TRP) is another top stock in the energy space to consider for earning a steady dividend. Thanks to its high-quality asset base, TC Energy witnesses higher utilization of its assets. Meanwhile, its regulated and contracted assets generate predictable earnings, despite the volatility in the market.
The company transports hydrocarbons and has consistently enhanced its shareholders’ returns for more than two decades. To be precise, TC Energy raised its dividend for 23 consecutive years. Furthermore, it pays a quarterly dividend of $0.93 a share, reflecting a high yield of 6.78%. Looking ahead, its utility-like business model and $34 billion secured growth projects augur well for growth. Further, it will likely support its future dividend payments, which the company expects to increase by 3-5% annually.
From energy, let’s move to the banking stocks. Canadian bank stocks have a solid track record of dividend payment and growth. Within the banking space, Scotiabank (TSX:BNS), with a dividend payment history since 1833, is a solid stock for passive-income investors. It pays a quarterly dividend of $1.03 a share, reflecting a high yield of 6.1%.
Its exposure to the high-quality banking markets, ability to grow loans, solid credit quality, and strong balance sheet position it well to consistently deliver higher earnings that will drive its future dividend payments. Furthermore, its low payout ratio is sustainable in the long term.
Bank of Montreal
My final stock is Bank of Montreal (TSX:BMO), which has the longest dividend payment history by any Canadian corporation. Bank of Montreal has been paying a dividend for a phenomenal 194 years. Meanwhile, its dividend increased at a compound annual growth rate of 4.9% in the past 15 years.
Bank of Montreal’s diversified earnings base, growing loans portfolio, operating efficiency, and solid credit profile position it well to deliver solid earnings and dividends. It pays a big dividend of $1.43 a share, reflecting a solid yield of 4.79%.