Dividend stocks offer regular income. Thankfully, many Canadian stocks consistently pay and grow their dividends, making them attractive investments to start a passive income stream that grows with you.
Against this background, in this article, I’ll discuss five TSX stocks with clear visibility over their future payouts. Further, as dividend payments are not guaranteed, I’ll focus only on stocks with a strong dividend payment history and solid earnings base.
My first pick is Fortis (TSX:FTS). This electric utility company has raised its dividend for 49 years on the back of its regulated business and predictable cash flows. Furthermore, Fortis projects 4–6% growth in its annual dividends over the next several years, making it a solid bet to earn worry-free income.
Fortis’ $22.3 billion capital plan will expand its rate base further, thus boosting its earnings and cash flows. The utility expects its rate base to increase at a CAGR (compound annual growth rate) of 6.2% through 2027, implying that Fortis’ future payouts are well-covered. Further, its growing renewable power generation capabilities augur well for growth. Currently, FTS offers a dividend yield of 3.86% (based on its closing price of $58.61 on May 17).
Like Fortis, TC Energy (TSX:TRP) is another reliable stock that consistently boosts its shareholders’ returns through higher dividend payments. TC Energy has raised its dividend for 23 years, thanks to its regulated and contracted assets and robust cash flows. At the same time, TRP’s dividend grew at a CAGR of 7%.
Looking ahead, this energy infrastructure company forecasts its dividend to grow by 3–5% annually on the back of its solid asset base, high utilization rate, and resilient earnings. Moreover, its $34 billion secured growth projects and energy transition opportunities will likely support its future earnings and dividend growth. In addition, investors can earn a high yield of 6.84%.
Telus (TSX:T) is another solid income stock. Since 2004, Telus has returned over $18 billion to its shareholders in dividends, supported by its profitable growth. Further, it has increased its dividend 24 times since May 2011. Telus’ growing subscriber base, lower mobile churn rate, expansion of 5G services, and investments in network infrastructure position it well to deliver steady earnings and dividend growth.
The telecom company intends to increase its dividend by 7–10% annually through 2025 under its multi-year dividend-growth program. T offers a healthy yield of 5.35%. Also, the payout ratio of 60–75% of its free cash flows is sustainable in the long term.
North American wholesale power producer Capital Power (TSX:CPX) has increased its dividend for nine consecutive years. Its diversified long-life assets, a strong pipeline of developmental projects, and power-purchase agreements add stability to its business and position it well to boost shareholders’ returns through higher dividend payments.
Capital Power expects to increase its annual dividend by about 6% through 2025 on the back of its resilient earnings base. Meanwhile, investors can earn a solid dividend yield of 5% by investing in Capital Power stock near the current levels.
The final stock in this list is AltaGas (TSX:ALA). The company has been enhancing its shareholders’ returns through higher dividend payments on the back of its solid mix of utility and midstream assets, which has driven its earnings at a CAGR of 12% since 2019.
Looking ahead, AltaGas’ low-risk utility business and growing rate base position it well to grow its dividend at a decent pace. AltaGas expects its dividend to increase at a CAGR of 5–7% through 2026 on the back of 8–10% growth in its rate base. ALA stock offers a dividend yield of 4.80% at current levels.