If you’re seeking to create a reliable source of passive income in Canada, you should ideally include some quality dividend stocks in your portfolio. To be a part of the S&P/TSX Canadian Dividend Aristocrats Index, besides fulfilling other eligibility criteria, a TSX-listed company has to increase its ordinary cash dividends for the last five years in a row, or it can maintain the same dividend for a maximum of two consecutive years during those five years.
While this is one of many approaches we can consider to define Dividend Aristocrats on the Toronto Stock Exchange, the definition of Canadian Dividend Kings remains unclear. But that doesn’t mean that the Canadian stock market doesn’t have stocks that exceed Dividend Aristocrats’ given criteria.
In this article, I’ll highlight two of the best Canadian dividend stocks that every Canadian investor should own, in my opinion, especially if they want to earn steady passive income for years to come.
Enbridge stock
I find any list of top Canadian dividend stocks incomplete without including Enbridge (TSX:ENB) in it. This Calgary-headquartered energy transportation and infrastructure company currently has a market cap of $100.1 billion, as its stock trades at $49.65 per share with 6.2% year-to-date losses.
At this market price, ENB stock offers a very attractive 7.2% annualized dividend yield and distributes its dividend payouts each quarter. More importantly, this energy company has raised dividends for 28 consecutive years.
The underlying strength in Enbridge’s business model could clearly be seen by analyzing its long-term financial growth trends. To give you an idea, in the five years between 2017 and 2022, this Canadian energy infrastructure giant’s revenue and earnings grew positively by 20% and 43%, respectively.
Besides consistent growth in its well-established traditional energy transportation business, Enbridge is also focusing on further diversifying its revenue streams by investing in renewable power and oil export segments. Given these positive indicators, you can expect its financial growth to remain strong in the long run, which should help this Canadian dividend stock trade positively.
Canadian Utilities stock
Canadian Utilities (TSX:CU) could be another top Canadian dividend stock to consider in 2023, as it has a great track record of raising its common share dividends for 51 years in a row. This electricity and natural gas distribution company currently has a market cap of $9.2 billion as its stock trades at $34.23 per share after witnessing 6.6% value erosion in 2023 so far. CU stock has a decent 5.2% annualized dividend yield at the current market price.
Despite facing pandemic-driven operational challenges, Canadian Utilities’s financial growth trends have remained positive in recent years. In the five years between 2017 and 2022, its revenue growth remained largely flat, but its adjusted earnings inched up by nearly 9% due mainly to favourable pricing.
Moreover, Canadian Utilities has a robust balance sheet that gives it the ability to continue investing in renewable power generation, clean fuels, and energy storage segments, brightening its long-term growth outlook.
