People invest in dividend stocks primarily to receive regular income streams, although a second benefit of price appreciation is most welcome. During inflationary periods like today, dividends help preserve purchasing power and fight inflation. If you’re in the market for the long term, pick reliable dividend payers to ensure success.
Companies like the Toronto-Dominion Bank (TSX:TD), Parkland Corporation (TSX:PKI), and Thomson Reuters (TSX:TRI) can provide investors with decades of passive income. The first stock has a dividend track record of 166 years and counting, while the next two are dividend growers. Since the companies are well-established in their respective industries, the stocks are less prone to market volatility.
A soon-to-be top 6 U.S. bank
TD is Canada’s second-largest lender and North America’s fifth-largest bank by asset size. The $152.4 billion financial institution is attempting to acquire Memphis-based First Horizon and if the transaction is complete, it will become a top-six U.S. bank.
According to published reports, the parties have extended the merger agreement date to May 27, 2023. While the deal is pending, most industry analysts are confident it will eventually close. Under TD’s five-year plan and combined footprint with First Horizon, 25% of new branches will be in low- and moderate-income or majority-minority markets.
Meanwhile, TD will satisfy investors with its quarterly dividends. At $83.28 per share (-2.82% year to date), the dividend offer is 4.61%. The Big Bank has a Dividend Reinvestment Plan for investors wishing to receive additional shares instead of cash dividends.
Diversified and resilient business model
Parkland started operations in 1977 and is a dividend aristocrat owing to 10 consecutive years of dividend hikes. If you invest today, the share price is $31.50 (+7.29% year to date), while the dividend yield is 4.28%. The $5.5 billion energy and retail company supplies and markets petroleum products in Canada, the U.S., and the Caribbean and operates convenience stores as a complementing business.
In 2022, sales and net earnings climbed 65% and 157% year over year to $35.4 billion and $416 million, respectively. Management said Parkland is strategically growing because of the diversified and resilient business model. Also, there’s a clear pathway to hit $2 billion in adjusted EBITDA by 2025.
Thomson Reuters trades slightly higher ($174.59 per share) and pays a modest dividend (1.55%). However, the industrial stock is a steady performer with its market-beating positive return of 13.5% thus far in 2023. The company has been around since 1851 and boasts a dividend growth streak of 29 years.
Today, the $82 billion business information service provider is a leading firm with a solid competitive position in the Legal, Corporates, Tax & Accounting, and Government market segments. Since 79% of revenues are recurring, Thomson Reuters generates strong and consistent cash flows.
In 2022, revenue and free cash flow rose 4% and 7% to US$6.6 billion and US$1.3 billion, respectively, versus 2021. Notably, operating profit jumped 48% year over year to US$1.8 billion. Steve Hasker, Thomson Reuters’ President and CEO, said, “Looking ahead, we remain focused on allocating capital to drive sustainable long-term value creation.”
Dividend investing is a proven strategy for investors with low-risk appetites. However, success highly depends on stock choices. TD, Parkland, and Thomson Reuters are reliable passive income providers because they generate predictable cash flows across economic cycles.