Dividend Investors: 4 Canadian Stocks for Many Decades of Payouts

Are you looking for decades of dividends? These four top Canadian income stocks are ideal for steady compounding returns.

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If you are a long-term investor, dividend quality and longevity are even more important than how large the dividend is. Why? A Canadian stock that is consistently grows its dividend is much more likely to consistently grow its earnings and cash flows.

That also tends to translate into consistent and steady stock performance. This creates a compounding of income and capital that can create significant wealth. If you are looking for dividends that could last decades, here are four top Canadian stocks to have on your radar.

A top Canadian railroad stock for dividend growth

Canadian National Railway (TSX:CNR) has delivered an impressive record of income and capital returns. Had you bought this stock 10 years ago and reinvested all your dividends, you would be sitting on a nice 246% return. That is 13.2% compounded annual rate of return.

Not only has this Canadian stock paid a dividend since 1996, but it has grown its annual dividend by over 4,500% since then. This dividend stock only yields 2%, but its dividend-growth record is hard to beat.

Canadian National has built out a dominant transportation network across North America. Its infrastructure is essential for the North American economy.

While CN may face some near-term economic headwinds in a recession, it has a smart new management team, a strong balance sheet, and excess capacity to keep growing. All around, this is a great long-term stock for steady, low-teens total returns.

A top utility

Fortis (TSX:FTS) stock has nearly 50-year track record of consecutive annual dividend increases. It started paying a $0.0875 annual dividend per share in 1973 (split adjusted). Today, this Canadian stock pays an annual combined dividend of $2.26 per share. Its dividend has increased 2,482% over the past 50 years!

Fortis is a simple, boring business. It provides electricity and gas transmission/distribution services across North America. While it is boring, it is steady and reliable. Today, it yields 4%.

The company expects to grow by around 5% annually for the next five years. This Canadian dividend stock has delivered mid- to high single-digit total returns for decades and that likely won’t stop anytime soon.

A utility for growth and income

Brookfield Infrastructure Partners (TSX:BIP.UN) is like a hybrid of CN Rail and Fortis. It owns a diverse mix of assets including railroads, ports, utilities, pipelines, and data centres. Given its asset mix, it provides an attractive combination of growth and income.

Over the past 10 years, investors have earned a +260% total return. In that time, it has compounded its distribution annually by around 9%. This dividend stock yields 4.3% today.

Brookfield owns utility-like assets, collects their cash flows, and then re-invests into acquiring new assets. The company has been high-grading its portfolio and has recession-resistant qualities. This is a good long-term Canadian stock for sleep-well-at-night income and growth.

A top Canadian energy stock for growing passive income

Energy stocks are not often equated to consistent dividend growth due to their cyclical nature. However, Canadian Natural Resources (TSX:CNQ) is an exception. Its stock has delivered a total return of 200% over the past decade. That is a 12% compound annual growth rate.

Its dividend has compounded by +20% annually over the past 23 years. CNQ is one of Canada’s best energy production operators. It has low-cost production and decades-long reserves that earn free cash flows even in oil bear markets.

Canadian Natural stock earns a 4.88% dividend yield today. Last quarter, it increased its dividend 6%, but investors can expect even more increases (or special dividends), as it reduces debt and/or if the price of energy rises.

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 Robin Brown has positions in Brookfield Infrastructure Partners. The Motley Fool recommends Brookfield Infrastructure Partners, Canadian National Railway, Canadian Natural Resources, and Fortis. The Motley Fool has a disclosure policy.

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