Dividend stocks should be a welcome addition to any portfolio. For younger investors, it could balance out a portfolio that’s likely very growth oriented, and thus potentially very volatile. For older investors, more dividend stocks could help stabilize dividend growth and distributions. In any case, I believe adding these three exceptional dividend stocks could be a good move for anyone reading this article.
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Start with one of the best
It’s impossible to discuss any Canadian dividend stocks and not mention Fortis (TSX: FTS). This stock is well known for its long history of raising its dividend distribution. In fact, Fortis’s 49-year dividend-growth streak is currently the second-longest active streak in Canada. The company has already announced its plans to continue raising its dividend at a rate of 4-6% through to at least 2027.
Looking at Fortis’s most recent earnings presentation, we can see that the company continues to grow at a rate that supports its aggressive dividend growth plans. For fiscal year 2022, the company reported a 7% year-over-year increase in its earnings per share. With a diversified business behind it, and steadily growing financials, Fortis is one dividend stock that investors shouldn’t pass up on today.
This stock has grown its dividend at a fast rate
If you’re looking for a stock that can beat inflation by a wide margin, then consider Canadian National Railway (TSX: CNR). This is Canada’s largest railway company, and one of the biggest companies of its kind in North America.
Listed as a Canadian Dividend Aristocrat, Canadian National is one of 11 TSX-listed companies to hold a dividend-growth streak of 26 years or more. What’s even more impressive is that Canadian National has been able to grow its dividend at a compound annual growth rate (CAGR) of 15.4% over that period. To put that into perspective, the long-term inflation rate is about 2%.
As of this writing, Canadian National maintains a dividend-payout ratio of about 39%. That suggests that the company has a lot of room to continue growing its dividend over the coming years.
Consider the Canadian banks
Finally, investors should consider investing in the Canadian banks. This is because the Canadian banking industry is highly regulated. That makes it harder for smaller competitors to displace the industry leaders. However, what many investors seem to forget is that, in addition to those formidable moats, Canadian banks are tremendous dividend stocks. Some companies have been able to distribute a dividend for more than 100 years.
Bank of Nova Scotia (TSX: BNS) is a great example of this. One of Canada’s largest banks, this company first started paying shareholders a dividend in 1833. Since then, it has never missed a payment. That represents about 190 years of continued dividend distributions. It should be noted that, over the past five years, Bank of Nova Scotia has grown its dividend at a CAGR of 5.4%. That’s more than twice the long-term rate of inflation.
