Amid economic uncertainty, it’s prudent to invest in Canadian dividend stocks that are safe. But before moving ahead, let’s admit that stocks are inherently volatile and risky. Furthermore, dividend payments are not guaranteed. Nonetheless, investors can look for shares companies that are less volatile, have solid dividend payment and growth histories, and growing earnings and cash flows to cover their future payouts.
Against this backdrop, I’ll discuss three fundamentally strong Canadian stocks offering reliable dividend income amid all market conditions. These corporations have resilient businesses and a growing earnings base. Let’s begin.
Fortis
Fortis (TSX:FTS) is a relatively much safer Canadian stock to earn regular dividend income. It operates 10 regulated utility businesses that remain relatively immune to economic cycles and generate predictable cash flows to support its dividend payments.
Thanks to its low-risk business and a growing regulated asset base, Fortis has grown its dividend uninterrupted for 49 consecutive years. Impressively, this Canadian utility giant expects to increase its investors’ returns further through higher dividend payments in the coming years. Through its $22.3 billion capital plan, the company expects to grow its regulated rate base at a CAGR (compound annual growth rate) of more than 6% through 2027, which will drive its future payouts.
Fortis expects to grow its annual dividend by a CAGR of 4-6% through 2027, which is positive. Meanwhile, its dividend yield of 3.8% is well protected, thanks to its defensive business model and a growing, regulated asset base.
Enbridge
Like Fortis, Enbridge (TSX:ENB) is another reliable stock to earn regular dividend income amid all market conditions. It transports crude oil and natural gas and has 40 diverse income streams to support its payouts. Meanwhile, its long-term contracts with provisions to reduce volume and price risks bode well for dividend payments.
Thanks to its utility-like business model Enbridge has consistently delivered solid distributable cash flows that enabled it to boost shareholders’ returns through higher dividend payments. It increased its dividend at a CAGR of 10% in the past 28 years. Impressively, it hiked its dividend during the pandemic, when most energy companies announced dividend cuts due to the erosion of demand.
Looking ahead, its ongoing investments in conventional and renewable assets will help the company to capitalize on energy demand. Further, its multi-billion-dollar secured capital projects, inflation-protected earnings before interest, taxes, depreciation, and amortization, and benefits from revenue escalators will drive its distributable cash flows and dividend payments.
Enbridge offers a stellar dividend yield of 6.6%. Moreover, its payout ratio of 60-70% of distributable cash flows is sustainable in the long term.
Canadian Utilities
With a stellar history of uninterruptedly increasing its dividend for 51 years, Canadian Utilities (TSX:CU) is one of the best stocks to earn dividends, regardless of market conditions. The company owns a highly contracted and regulated earnings base, which provides the foundation for continued dividend growth. Further, as the company earns most of its earnings through regulated and contracted assets, its payouts remain well covered.
Canadian Utilities continues to invest in regulated utility and commercially secured capital growth projects, which will contribute to its earnings growth and future dividend payments.
Thanks to its resilient business model, growing earnings base, and easily manageable debt profile, Canadian Utilities could continue to drive its shareholders’ returns through higher dividend payments. Investors can earn a decent yield of 4.7% by investing in Canadian Utilities stock near the current levels.
