Investors can earn secondary, or passive, income by investing in dividend stocks. Along with regular payouts, these companies also stabilize investors’ portfolios. Meanwhile, dividends are not guaranteed. So, investors should look to invest in companies with a solid underlying business, stable cash flows, and an excellent track record of raising dividends. Considering all these factors, investors can buy the following three TSX stocks that have increased their dividends at a healthier rate for the last few years.
Canadian Natural Resources
Canadian Natural Resources (TSX:CNQ) is an oil and natural gas company operating primarily in Western Canada, the North Sea, and Africa. Supported by its diversified long-life low-decline asset base and efficient operations, the company generates healthy cash flows, allowing it to raise its dividends at a CAGR (compounded annual growth rate) of about 21% for the last 23 years. With a quarterly dividend of $0.90/share, its forward yield stands at 5%.
Meanwhile, analysts are projecting oil prices to increase in the second half of this year amid the announcements of production cuts by OPEC (Organization of the Petroleum Exporting Countries) and its allies. Higher oil prices could benefit CNQ. Besides, the company has lowered its debt levels, which could boost its free cash flows in the coming quarters, thus making its future payouts safer. Besides, CNQ also trades at an attractive NTM (next 12 months) price-to-sales multiple of 2.2, making it an attractive buy.
Enbridge
Second on my list would be Enbridge (TSX:ENB), which operates a midstream energy business earning around 98% of adjusted EBITDA from long-term contracts and regulated assets. So, commodity price fluctuations impact only 2% of its financials. Additionally, approximately 80% of its adjusted EBITDA is inflation-indexed, thus protecting its financials from rising prices. Supported by its stable and predictable financials, the company has raised its dividends at a CAGR of over 10% for the previous 28 years. Currently, the company pays a quarterly dividend of $0.8875, translating its forward yield to 7.34%.
Meanwhile, the demand for the company’s services is growing amid rising petroleum product exports from North America to Europe. Notably, the company is progressing with its $17 billion secured capital program, expecting to put $3.5 billion and $2.9 billion worth of projects into service in 2023 and 2024, respectively. So, these investments could boost the company’s financials, with management expecting its adjusted EBITDA to grow by 3–5% through 2025. So, I believe Enbridge is well-equipped to maintain its dividend growth, thus making it attractive for income-seeking investors.
goeasy
My final pick would be goeasy (TSX:GSY), which provides leasing and lending services to subprime customers. The company has been one of the top performers over the last 10 years, with returns of above 1,300% at a CAGR of 30.4%. Solid operational performance and strategic acquisitions drove its financials and stock price. Supported by its strong financials, the company has raised its dividends at a CAGR of around 31% since 2014. It currently pays a quarterly dividend of $0.96/share, with its forward yield currently at 3.47%.
Meanwhile, the company’s management has provided optimistic guidance for the next three years. Gross consumer loan receivables are projected to grow by 70% to $5.1 billion by 2025. Its topline could grow at an annualized rate of 18.6% while delivering a return on equity of over 21% annually. So, I believe goeasy, which trades at an attractive NTM price-to-earnings multiple of 7.7, would be an excellent buy to boost your passive income.
