The fear of a global slowdown amid rising interest rates and geopolitical tensions has turned the equity markets volatile. Given the volatile environment, investors should strengthen their portfolios by adding quality dividend stocks. Given their regular payout and solid underlying businesses, these companies are less susceptible to market volatility, thus providing stability to your portfolios. Meanwhile, here are my three top picks.
Enbridge
Enbridge (TSX: ENB) is one of the safest dividend stocks to have in your portfolio, given its impressive record of dividend growth, regulated midstream energy business, and healthy growth prospects. The company operates over 40 diverse revenue-generating assets, with commodity rate fluctuations impacting only 2% of its cash flows. So, it generates stable and predictable cash flows, which has allowed the company to pay dividends uninterrupted since 1955. The company has also been raising its dividend at a CAGR (compound annual growth rate) of 10% over the previous 28 years, with its yield currently at 6.68%.
Further, Enbridge is growing its asset base through a $17 billion secured capital program amid increasing energy demand and European exports. Meanwhile, the management hopes to put $6.4 billion worth of projects into service over the next two years, thus driving its financials. Amid these growth initiatives, the management expects its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) to grow by 4-6% annually until 2025 and 5% after that. With its liquidity at $12.6 billion, the company’s financial position also looks solid, thus making it an ideal buy.
Pizza Pizza Royalty
Another excellent dividend stock that could strengthen your portfolio would be Pizza Pizza Royalty (TSX: PZA). The company operates a highly franchised business, collecting royalty from its franchisees based on their sales. So, rising prices will not have much impact on its financials, thus allowing it to pay the dividend at a healthy rate.
Meanwhile, the company reported a solid first-quarter performance yesterday, with its same-store sales and adjusted earnings per share growing by 13.6% and 16.2%, respectively. Strong promotional activities, value messaging, and price hikes drove its financials. Supported by solid financials, the company raised its monthly dividend by 3.6% to $0.0725/share, with its yield at 6.17%.
Meanwhile, the uptrend in the company’s financials could continue amid growing same-store sales and its restaurant expansion. The company plans to increase its restaurant count by 3-4% this year. So, given its stable cash flows and healthy growth prospects, I believe Pizza Pizza Royalty’s payout is safe.
Canadian Utilities
With impressive dividend growth of 51 years, Canadian Utilities (TSX: CU) would be an excellent buy to stabilize your portfolio. With a substantial percentage of its financials generated from low-risk transmission and distribution business, the company’s cash flows are mostly predictable, thus allowing it to raise dividends consistently. It currently pays a quarterly dividend of $0.4486/share, with its forward yield at a healthy 4.55%.
Further, the company has adopted a three-year capital-investment plan, which could grow its rate base at a CAGR of 2% through 2025. It also acquired a portfolio of renewable energy facilities from Suncor Energy, with a total production capacity of 232 megawatts. Along with these growth initiatives, the company’s operational excellence could boost its financials in the coming years, thus allowing Canadian Utilities to maintain its dividend growth.
