In theory, dividend stocks are very stable companies. At least, much more stable than growth stocks. That’s what allows them to distribute a portion of their earnings each quarter (note: some stocks may have different payment schedules). However, sometimes, companies will suspend their dividend programs if the economic environment doesn’t look very promising. This is done to keep the company’s business afloat.
Because of that possibility, investors need to be very certain about which dividend stocks they pin their hopes on. In this article, I discuss two TSX dividend stocks that investors could buy for lasting wealth.
Invest in this well-known company
Canadian National Railway (TSX:CNR) may be one of the recognizable companies in Canada. It operates nearly 33,000 kilometres of track, which spans from British Columbia to Nova Scotia. Canadian National also operates in the United States, with track going as far south as Louisiana.
As far as dividend companies go, this is one of the more impressive ones in Canada. Canadian National has managed to maintain a dividend-growth streak of 26 years. That makes it one of only 11 TSX-listed companies to currently surpass that mark.
Generally, I look for stocks that maintain a dividend-payout ratio of 50% or lower. That suggests that the company could comfortably continue raising its dividend over time. In this case, Canadian National fits the bill. As of this writing, its dividend-payout ratio stands at 37.6%.
Looking at the stock’s five-year performance, investors can note a 60% increase in value. This return becomes more impressive when its dividend is included. If you ask me, Canadian National is a stock that any Canadian investor should be able to get behind.
Have you considered buying shares of this stock?
I’m willing to bet that you, or someone in your family, is familiar with Alimentation Couche-Tard (TSX:ATD). If that name doesn’t ring a bell, perhaps you know it as Mac’s. Yes, I’m talking about the convenience store company. Honestly, Alimentation Couche-Tard isn’t the kind of business that turns heads when you pass it by on the street. However, if you ever do look inside, you’re sure to see that there are always customers there.
That steady stream of customers is exactly what an investment thesis in this company is built upon. For those that aren’t familiar, Alimentation Couche-Tard actually operates under several banners. This includes Circle K, On the Run, Dairy Mart, and more. All considered, Alimentation Couche-Tard operates more than 14,000 locations across the world.
Listed as a Canadian Dividend Aristocrat, Alimentation Couche-Tard has increased its dividend in each of the past 11 years. With an exceptionally low dividend-payout ratio of about 12.7%, I’m confident this company will continue to grow its dividend for years to come.
As an added incentive to invest in this company, investors should note that Alimentation Couche-Tard stock has done a great job of increasing in value over time. Over the past five years, this stock has gained 144%. That’s very impressive for a dividend stock.
