4 Top Stocks With High Dividend Growth to Buy in 2023 and Hold Forever

Investors can strengthen their portfolio by adding these four high-dividend growth stocks.

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The global equity markets have witnessed healthy buying over the last few days amid signs of easing inflation. The S&P/TSX Composite Index is up around 6% from last month’s lows. However, Canada’s food prices and mortgage expenses are still higher. So, I believe the federal reserve will not be in a hurry to lower its benchmark interest rates. A prolonged high-interest rate environment and higher prices could hurt economic growth, thus impacting equity markets.

Given the uncertain outlook, investors should buy high-dividend growth stocks to strengthen their portfolios and earn a stable passive income. Meanwhile, here are my four top picks.

Enbridge

Enbridge (TSX:ENB) would be one of the top dividend stocks to have in your portfolio, given its regulated business, solid track record, and high yield. The company operates a contracted midstream business, generating 98% of its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) from long-term cost-of-service contracts. So, its cash flows are stable and predictable, thus allowing it to pay dividends uninterruptedly for the last 68 years.

Besides, it has raised its dividends at a CAGR (compound annual growth rate) of 10% over the previous 28 years, with its forward yield currently at 7.2%. Meanwhile, the company is expanding its asset base with a $17 billion secured capital program. Supported by these growth initiatives, the company’s management projects its adjusted EBITDA to grow at a CAGR of 4-6% through 2025 and 5% after that. So, given its growth prospects and a healthy liquidity of $12.6 billion, Enbridge’s future payouts are safe, making it an excellent buy.

Canadian Natural Resources

Second on my list would be Canadian Natural Resources (TSX:CNQ), which has raised its dividends at a CAGR of 21% for the previous 23 years. It currently pays a quarterly dividend of $0.90/share, with its forward yield at 4.55%. Oil prices have bounced back strongly from last month’s low, with Brent crude rising by over 15% to US$83/barrel. Meanwhile, Goldman Sachs remains bullish on oil and expects oil prices to rise to US$86/barrel by the end of this year amid production cuts by OPEC (Organization of the Petroleum Exporting Countries).

Meanwhile, CNQ plans to invest around $5.2 billion this year to increase its production by 70,000 barrels of oil equivalent per day. Besides, the company has reduced its debt levels amid solid financials, which could lower its interest expense and boost profitability. The company’s financial position also looks healthy, with its liquidity at $6.1 billion at the end of the first quarter. So, considering all these factors, I believe CNQ is well-positioned to continue its dividend growth in the coming years.

goeasy

goeasy (TSX:GSY), which offers leasing and lending services to subprime customers, has paid dividends for 19 consecutive years. Meanwhile, the company has raised its dividends by an impressive CAGR of 30.9% over the last nine years, with its forward yield at 3.06%.

With the federal government indicating its intent to lower the maximum allowable annual percentage rate (APR) on loans to 35% from 47%, the company has lost around 13% of its stock value. It trades at an attractive NTM (next 12 months) price-to-earnings multiple of 8.9, making it an attractive buy.

Meanwhile, the subprime lender expects its loan portfolio to reach $5.1 billion by 2025, representing 70% growth from its current levels. The loan portfolio expansion could drive its financials, delivering an annual return on equity of over 22% until 2025. So, I believe goeasy is well-positioned to continue its dividend growth.  

BCE

With a forward dividend yield of 6.72% and an attractive NTM (next 12 months) price-to-sales multiple of 2.1, BCE (TSX:BCE) would be my final pick. Telecommunication service providers earn substantial revenue from recurring sources, thus delivering stable and predictable cash flows. Supported by stable cash flows, the company has raised its dividends by over 5% annually for the previous 15 years.

Meanwhile, the demand for telecommunication services is rising amid digitization and increased adoption of a hybrid work culture and online shopping. BCE continues to strengthen its 5G and broadband infrastructure amid growing demand. These initiatives could boost its financials in the coming quarters, thus allowing it to continue paying dividends at a healthier rate.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Rajiv Nanjapla has no position in any of the stocks mentioned. The Motley Fool recommends Canadian Natural Resources and Enbridge. The Motley Fool has a disclosure policy.

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