Dividend stock investing is one of the best and easiest ways to earn regular income. Even though stocks remain volatile, a few of them continue to enhance their shareholders’ returns through regular payouts and consistent dividend growth in all market conditions.
Fortunately, the Canadian stock market has several dividend-paying stocks with fundamentally strong businesses that have been paying and growing their dividends regardless of recession and wild market swings.
Against this backdrop, I’ll focus on a top TSX stock that can help you earn worry-free income in the future. But before discussing the stock, it’s important to highlight here that a company’s dividend payouts depend on its financial performance. Thus, dividend payments are not guaranteed, and a company might suspend or reduce its payouts depending on the operating environment.
Thus, one must diversify an income portfolio and focus on stocks with a growing earnings base and solid dividend payout history. Let’s begin.
Top stock for reliable dividend income
As highlighted before, the TSX has several top-quality stocks that offer reliable dividends and high yields. One among them is Enbridge (TSX:ENB). Thanks to its stellar dividend payment history, resilient business, compelling yield, and growing cash flows, this large-cap stock is a must-have in your portfolio and my top pick to earn passive income regardless of market economic situations.
Enbridge works in the energy space. It provides energy infrastructure assets used to transport and export oil and gas. It also has a regulated natural gas utility business and owns a growing portfolio of renewable energy facilities.
As Enbridge plays a critical role in energy transportation, its assets benefit from high utilization and deliver stable distributable cash flows (DCF) to support higher payouts. Enbridge has been paying dividends for over 68 years. Impressively, it increased the same at an average annualized growth rate of 10% in the past 28 consecutive years. Furthermore, it offers an attractive yield of about 7.3% (based on the closing price of $48.48 on July 31).
Enbridge’s future dividend payouts are secure
Enbridge is a Dividend Aristocrat well-positioned to enhance its shareholders’ returns through regular dividend payments and growth. The company’s two-pronged growth strategy, including investment in conventional energy assets and expansion of renewable business sources, augurs well for growth and positions it well to capitalize on long-term energy demand.
Its highly diversified cash flows and long-term contracts bode well for future dividend growth. Moreover, the regulated cost-of-service tolling frameworks, power-purchase agreements, and low-risk commercial arrangements are positives.
In addition, Enbridge’s distributable cash flows will benefit from its multi-billion secured capital program. Further, its focus on low capital-intensity growth projects and utility-like businesses bode well for future dividend growth.
While Enbridge’s cash flows are projected to grow, its payout ratio of 60–70% of DCF is sustainable in the long term, making it a dependable income stock.
Bottom line
Enbridge’s robust dividend payment and growth history, resilient business model, solid secured projects, and energy transition opportunities augur well for future growth.
| Company | Recent Price | Number of Shares | Dividend Per Share | Payout | Frequency |
| Enbridge | $48.48 | 285 | $0.887 | $252.4 | Quarterly |
Meanwhile, the table shows that if you buy about 284 shares of Enbridge right now, you can earn approximately $252 in dividend income every quarter, or over $1,000 per year. To buy 285 shares of Enbridge at the recent market price, one would need to invest approximately $13,800.
