Old Faithfuls: Canadian Stocks Whose Dividend Payments Rise Each Year

Income investors should feel safe and secure owning three dividend aristocrats, also known as the old faithful trio.

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Investing in stocks is a personal decision and usually aligns with one’s risk tolerance. Many income-seeking investors flock to dividend stocks to generate extra cash. However, to ensure dependable and growing income streams, pick dividend aristocrats or companies that have increased their dividends for at least five consecutive years.

Canadian stocks like TC Energy (TSX:TRP), ATCO Ltd. (TSX:ACO.X), and TELUS Inc. (TSX:T) belong to the distinguished list. Because the dividend payments rise each year, loyal shareholders refer to them as ‘old faithfuls’. Their share prices could fluctuate depending on market volatility, but the payouts should continue without the threat of decline.

Long-life assets

TC Energy boasts a dividend growth streak of 22 years, and management said the $34 billion secured growth projects could support annual dividend growth between 3% and 5%. The current share price is 52.84, while the dividend yield is a juicy 6.97%. Around 250 shares ($13,210) will produce $230.18 in passive income every quarter.

Energy (-10.25%) is the worst-performing sector thus far in 2023, but this large-cap energy stock continues to hold ground with its minimal 0.39% year-to-date loss. The $52.8 billion energy infrastructure company boasts high-quality, irreplaceable assets.

In Q1 2023, net income soared 236.8% year over year to $1.3 billion. TC Energy will continue to develop quality projects under its capital program. Management is confident the long-life infrastructure assets and long-term commercial arrangements or regulated business models will generate significant earnings and cash flow growth.

Defensive holding

ATCO has raised its dividends for 29 consecutive years and is also the parent company of Canadian Utilities, the only dividend king in Canada. This $4.7 billion company invests in several businesses with long growth runways. The investment portfolio of essential global services includes agriculture, energy, energy infrastructure, housing, logistics, real estate, transportation, and water.

In a declining market with elevated volatility, utility stocks are defensive assets. At $41.73 per share (+0.71% year to date), ATCO pays an attractive 4.47% dividend. For Q1 2023, capital investment increased 245.4% to $1.1 billion, while consolidated earnings climbed 29.8% to $318 million versus Q1 2022.

Scaling its innovative digital capabilities

TELUS is one year short of achieving two decades of dividend hikes. The $37.2 billion telecom giant provides essential communications services and continues to deliver strong results. Besides the 15.9% increase in operating income in Q1 2023 to $5 billion, telecom subscriber connections rose 17.3% year over year to 18,236.

Notably, free cash flow increased 28.9% to $535 million from a year ago due to lower capital expenditures. The Board also approved a 7.4% increase in dividends for Q2 2023. TELUS trades at $25.72 per share (-0.29% year to date) and pays a 5.55% dividend.

Management’s near-term plan is to scale its innovative digital capabilities in TELUS Health, TELUS Agriculture, and TELUS International. The 5G stock is also keeping in step with competition by doubling its national spectrum holdings. TELUS spent over $7.2 billion to purchase wireless spectrum licences in spectrum auctions and other private transactions.  

Quality assets

Income investors couldn’t ask for more when holding dividend aristocrats in their stock portfolios. TC Energy, ATCO, and TELUS are quality assets with annual dividend increases, and they will be safe and secure for years to come.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool recommends TELUS and Telus International. The Motley Fool has a disclosure policy.

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