Dividend stocks are a compelling investment to start a passive-income stream. Further, stocks that consistently increase their dividends can help investors earn a growing income stream. Thankfully the TSX has several fundamentally strong stocks that have been paying and raising their dividend payments. Moreover, a handful of them offer visibility over their future payouts.
So, if you plan to start an income stream that will grow with you, consider investing in the following Canadian stocks. But before I dig deeper, investors should note that dividends are not guaranteed. Thus, investors must diversify their portfolios to reduce risk and earn worry-free income. Let’s begin.
Brookfield Renewable Partners
I’ll begin with a pure-play green energy stock Brookfield Renewable Partners (TSX:BEP.UN). With an installed capacity of 31,600 megawatts and a solid development pipeline, Brookfield Renewable is a compelling stock to capitalize on the growing adoption of clean energy and benefit from its attractive payouts.
Its high-quality assets, power-purchase agreements, long-term contracts, and investments in power technologies and projects with solid risk-adjusted returns position it well to enhance its shareholders’ returns. Its dividend has increased at a CAGR (compound annual growth rate) of 6% for more than two decades. Meanwhile, it expects to grow its dividend by 5-9% in the coming years. Brookfield offers a decent yield of 4.6% (based on its closing price of $39.46 on July 24).
Capital Power (TSX:CPX) is another top stock in the clean energy space to consider for a growing income stream. The company owns diversified, utility-scale power-generation facilities in North America. Thanks to its high-quality asset base and contracted power-generation portfolio, Capital Power generates growing cash flows to support higher dividend payments.
Capital Power’s dividend has grown at a CAGR of 6% in the past nine consecutive years. Furthermore, its diversified renewable asset portfolio and a robust pipeline of growth projects position it well to grow its future dividend by 6% annually through 2025. Capital Power offers a yield of 5.54%, near the current levels.
From green energy, let’s move to telecom and focus on Telus (TSX:T). The company is famous for its stellar dividend payments and growth history. Thanks to its profitable growth, Telus has raised its dividends 24 times since 2011. Moreover, it has paid over $18 billion in dividends since 2004. Thanks to its multi-year dividend-growth program, Telus intends to grow its annual dividend by 7-10% through 2025. Further, it offers a yield of 5.9%.
Telus is also an exciting stock to capitalize on the 5G revolution. The expansion of its 5G services and investments in network infrastructure position it well to expand its user base, lower mobile churn rate, and deliver higher earnings and dividend payouts.
AltaGas (TSX:ALA) stock is another lucrative investment to start a growing passive-income stream. The company’s solid mix of low-risk utility and midstream assets enables it to generate substantial earnings to enhance its shareholders’ returns via higher dividend payments.
The company intends to grow its rate base by 8-10% per annum, which will drive its future earnings. Moreover, the company will likely benefit from its high-growth midstream operations. Looking ahead, AltaGas plans to increase its dividend by 5-7% per annum through 2026 and offers a yield of 4.5%.
The final stock is Fortis (TSX:FTS), which increased its dividend for 49 consecutive years. The company operates 10 utility businesses that generate predictable and growing cash flows. Moreover, it benefits from continued rate base growth, which drives its earnings.
Fortis expects projects its rate base to increase at a CAGR of over 6% through 2027. Thanks to the expansion of its rate base, Fortis plans to grow its dividend by 4-6% annually during the same period. Currently, Fortis stock offers a dividend yield of nearly 4%.