A dividend investing strategy helps you make a steady income. Further, many Canadian stocks consistently pay and grow their payouts. This implies that investors can earn a dividend income that will continue to grow with them.
Thankfully, the TSX has several top-quality dividend stocks that have been paying and growing their dividends. Further, these companies offer visibility over their future payouts, implying investors can expect long-term income growth by investing in these stocks.
Fortis
With a stellar dividend-growth history and visibility over future payouts, Fortis (TSX: FTS) stock is a must-have to start a growing passive-income stream. The electric utility company owns regulated assets that generate predictable cash flows and enables the company to enhance its shareholders’ returns with higher payouts.
Fortis has uninterruptedly increased its dividend for 49 years. Furthermore, it projects a 4-6% increase in its annual dividend through 2027. The higher dividend payments will likely be covered through its growing rate base. Fortis expects its rate base to increase at a CAGR (compound annual growth rate) of over 6% through 2027, which will drive its earnings and dividend payouts. It offers a well-protected yield of 4%.
AltaGas
AltaGas (TSX: ALA) stock is another lucrative option for investors seeking long-term income growth. The company’s solid portfolio of low-risk utility assets and high-growth midstream business enables it to boost its shareholders’ return through higher dividend payouts.
Thanks to its solid mix of utility and midstream assets, management expects AltaGas’s adjusted earnings to grow at a CAGR of 12% from 2019 to 2023. Thanks to its growing rate base (8-10% average annualized growth rate) and durable earnings growth, AltaGas expects to increase its dividend at a CAGR of 5–7% through 2026. Investors can earn a yield of 4.7% by investing in AltaGas stock at the current levels.
TC Energy
TC Energy (TSX: TRP) has raised its dividend for more than two decades. To be precise, TC Energy has increased its dividend for 23 years at a CAGR of 7%. It transports oil and gas and benefits from its highly contracted and regulated asset base. Thanks to its high-quality assets, it benefits from high utilization and remains relatively immune to economic cycles.
It’s worth highlighting that TC Energy generates nearly 95% of its earnings from the low-risk contracted and regulated assets. This means that its payout is safe. Its multi-billion-dollar secured projects would expand its high-quality asset base, which will support its earnings and dividend growth. The company plans to increase its future dividend at a CAGR of 3-5%. Moreover, it offers a high yield of nearly 7%.
Telus
Shares of telecom giant Telus (TSX: T) could be another solid addition to your portfolio for a growing income stream. Thanks to its profitable earnings growth, Telus has returned over $18 billion in dividends to its shareholders since 2004. Impressively, it has raised its dividend 24 times since 2011.
Looking ahead, the company plans to increase its dividend by 7–10% per annum through 2025. Telus’s growing subscriber base, expansion of 5G offerings, lower mobile churn rate, and investments in network infrastructure augur well for future earnings growth and will likely support its higher dividend payments. Its payout ratio of 60-75% of its free cash flows is sustainable, while the company offers an attractive yield of 5.7%.
