Dividend-paying stocks add to your income post-retirement. Thus, people nearing retirement should own a few top-quality Canadian dividend stocks. However, one must take caution, as stocks are volatile, and dividend payouts are not guaranteed. Investors should focus on companies with well-established businesses, solid dividend payment history, growing earnings base, decent yield, and sustainable payout ratios.
With this background, I’ll focus on three Canadian stocks that have uninterruptedly paid and raised their dividends for years. Moreover, I’ll restrict myself to large-cap corporations with a growing earnings base and well-covered payouts.
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Toronto-Dominion Bank
Investors seeking regular and reliable income could consider adding shares of top Canadian banks. Large Canadian banks have been paying and growing their dividends for decades. Toronto-Dominion Bank (TSX:TD) is a solid investment within the banking sector.
The financial services giant has paid a regular dividend for 166 years. Impressively, its dividend has increased at an average annualized growth rate of 11% since 1995.
Its solid dividend payouts are supported by the growing earnings base. Notably, the bank’s diversified revenue streams, expansion of loan portfolio, stable credit quality, and strong balance sheet drive its revenue and earnings. Furthermore, TD’s focus on accretive acquisitions supports its growth.
Toronto-Dominion Bank offers a lucrative dividend yield of 4.87% (based on its closing price of $78.83 on June 12). Further, its payout ratio of 40-50% is low and sustainable in the long term.
Enbridge
From banking, let’s move to the energy space. Within the energy sector, investors could rely on the shares of Enbridge (TSX:ENB). The company transports oil and gas and has been consistently enhancing its shareholders’ returns through higher dividend payments.
Enbridge’s dividend has increased at an average annualized growth rate of 10% in the last 28 years. Further, it raised dividend even during the COVID-19 pandemic, which shows the resiliency of its business.
Its diversified income streams, ongoing investments in conventional and renewable assets, and ability to generate low-risk cash flows across commodity and economic cycles make it a must-have income stock. Also, low capital-intensity growth projects and power-purchase agreements augur well for future growth. It offers an attractive yield of 7.09%. Meanwhile, its payout ratio of 60-70% of distributable cash flows is sustainable.
Fortis
Fortis (TSX:FTS) stock is a must-have in any income portfolio. The company owns a low-risk and regulated utility business that generates predictable cash flows, allowing the company to increase its dividend with ease and boost its shareholders’ returns.
Fortis raised its dividend for 49 consecutive years and expects to increase it further at a decent pace in the coming years. To be precise, the company targets 4-6% growth in its annual dividend in the medium term, which seems achievable given its growing rate base.
Through its multi-billion-dollar capital projects, Fortis expects its rate base to grow at a compound annual growth rate of 6.2% through 2027. This means that the company can cover its target payouts with ease.
Investors can earn a well-protected yield of 3.92% by investing in Fortis stock near the current levels.
