A solid portfolio of dividend-paying stocks can boost your income and act as a hedge amid downturns. While Canadian domestic dividend stocks are an excellent source to generate consistent income, one must take caution before investing, as dividend payments are not guaranteed. Thus, to build a solid dividend portfolio with Canadian dividend stocks, investors should focus on shares of fundamentally strong companies with a growing earnings base, a solid history of dividend payments, and reliable dividend payouts.
Against this backdrop, I’ll discuss three Canadian stocks that can help investors to build a stable dividend portfolio with domestic stocks. These Canadian corporations have solid dividend payout histories and offer diversification to reduce risk.
Fortis
Shares of the utility company Fortis (TSX:FTS) are a must-have in a dividend portfolio. It owns regulated electric utility businesses that generate predictable cash flows. Thanks to its solid cash flows and resilient business, this low-volatility stock consistently enhances its shareholders’ returns by increasing its annual dividend payments.
It’s worth highlighting that Fortis has uninterruptedly increased its dividend for 49 years. Furthermore, it forecasts a 4-6% growth in its annual dividend through 2027 on the back of its growing rate base led by a multi-billion capital program.
Through its $22.3 billion capital plan, Fortis sees its rate base growing at a CAGR (compound annual growth rate) of over 6% through 2027. Its growing rate base and energy transition opportunities bode well for future dividend growth. Meanwhile, its low-risk business indicates that its payouts are well protected.
Investors can earn a decent dividend yield of 3.6% by investing in Fortis stock near the current price levels.
Enbridge
Along with Fortis, Enbridge (TSX:ENB) is a solid stock to earn reliable income amid all market conditions. Its extensive midstream assets, interests in renewable energy facilities, a highly diversified income stream, and contractual arrangements to lower commodity price and volume risks allow it to boost its shareholders’ return through attractive dividend payments.
Enbridge has been paying a dividend for 68 years. Meanwhile, it increased its dividend at a CAGR of 10% in the past 28 years. Furthermore, Enbridge offers a lucrative dividend yield of 6.81% (based on its closing price of $52.11 on May 12).
Looking ahead, Enbridge’s ongoing investments in conventional and renewable energy assets position Enbridge well to capitalize on the long-term demand. Also, its multi-billion-dollar secured capital program will drive its cash flows and dividend payments.
Bank of Montreal
From utilities and energy, let’s move to banks. The top Canadian banks have been paying dividends for decades. For instance, Bank of Montreal (TSX:BMO) has been paying dividend for 194 years, the longest-running dividend-payout record by any Canadian corporation.
Bank of Montreal’s well-diversified revenue base, high-quality assets, ability to control non-interest costs, and solid balance sheet augur well for earnings growth and dividend payments.
Bank of Montreal is expected to benefit from higher loans and deposits, a highly profitable banking business in the domestic market, a growing U.S. banking business, and a solid digital platform that enhances its reach. Investors can rely on Bank of Montreal stock for steady dividend income. Meanwhile, they can earn a well-protected yield of 4.81%.
