Dividend investing is one of the popular investment strategies. By investing in dividend stocks, investors can earn a stable passive income and strengthen their portfolios. Meanwhile, here are the top five dividend stocks that could boost your passive income.
Enbridge
Enbridge (TSX: ENB) would be one of the top dividend stocks to have in your portfolios, given its cost-of-service or contracted cash flows, solid track record of dividend growth, and high dividend yield. The midstream energy company earns around 98% of its cash flows from cost-of-service or contracted assets, thus delivering stable and predictable cash flows. Supported by its stable cash flows, the company has raised its dividends at a CAGR (compound annual growth rate) of above 10% over the last 28 years. Its forward dividend yield stands at an attractive 7%.
Meanwhile, Enbridge is progressing with its $17 billion secured capital program. Given the contributions from its investments, asset optimization, increase in toll rates, and organic growth, the company’s management is hopeful of growing its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) at a rate of 4-6% through 2025 and around 5% after that. So, I believe Enbridge is well positioned to continue with its dividend growth.
BCE
Given the growing demand for telecommunication services amid digitization and their recurring revenue stream, telecommunication companies are among the top dividend stocks to have in your portfolio. So, I have selected BCE (TSX: BCE), which has raised its dividends by over 5% annually for the last 15 years, as my second pick. It currently pays a quarterly dividend of $0.9675/share, with its yield currently at 6.31%.
Meanwhile, BCE is continuing with its capital expenditure, spending around $1.1 billion in the first quarter, expanding its broadband and 5G infrastructure. Amid its continued investments, the company’s management hopes to add 650,000 broadband locations this year while covering 85% of the population with its 5G service. These investments could grow its customer base while driving its financials. Meanwhile, the company’s management expects its 2023 adjusted EBITDA to grow by 2-5%, thus making its future payouts safer.
Canadian Utilities
Canadian Utilities (TSX: CU) has raised its dividends for the last 51 years, one of the longest Canadian public companies to do so. Its diversified utility assets generate predictable cash flows, allowing the company to raise its dividends consistently. It currently pays a quarterly dividend of $0.4486/share, translating its forward yield to 4.96%.
Meanwhile, the company has planned to grow its rate base at a CAGR of 2% through 2025. The expansion of its rate base and operational excellence could continue to drive its financials, thus making Canadian Utilities an attractive buy for income-seeking investors.
Pizza Pizza Royalty
Pizza Pizza Royalty (TSX: PZA) operates a highly franchised restaurant business, collecting royalty from its franchisees based on their sales. So, inflation will have a lesser impact on its financials. The company is witnessing solid growth in its same-store sales amid its promotional activities, value messaging, and reopening of non-traditional restaurants.
Its adjusted earnings per share also grew by 16.2% in the March-ending quarter, thus allowing the company to raise its monthly dividend by 3.6% to $0.0725/share. It was the sixth hike since April 2020, while its dividend yield currently stands at a healthy 5.90%. Meanwhile, I expect the uptrend in the company’s financials to continue, given its restaurant expansion plans.
NorthWest Healthcare Properties REIT
With a forward yield above 10%, NorthWest Healthcare Properties REIT (TSX:NWH.UN) would be my final pick. The rising interest rates and a temporary surge in its debt levels had impacted its financials, thus dragging its stock price down while raising its dividend yields. Meanwhile, the company has taken deleveraging initiatives, such as lowering its stake in the United States and United Kingdom joint ventures and selling off non-core assets, to pay off higher interest-bearing debt, thus reducing its interest expenses.
The company enjoys a high occupancy rate due to its defensive healthcare portfolio, government-backed tenants, and long-term lease agreements. Also, around 80% of its rent is inflation-indexed, thus protecting against rising prices. Considering all these factors, I believe NorthWest Healthcare would be an ideal buy to boost your passive income.
