Dividend-paying stocks provide a regular inflow of cash. Thus, having a few high-quality dividend stocks in your portfolio adds to your income in times of need. Moreover, the reinvestment of the same enables you to own more shares, boosting the overall returns in the long term. Given these attributes, everyone should own a few fundamentally strong dividend stocks.
So, if you are seeking safe stocks for regular income, consider investing in the shares of Enbridge (TSX:ENB), Fortis (TSX:FTS), and Toronto-Dominion Bank (TSX:TD). These firms have solid dividend payments and growth history, a key parametre for selecting a dividend stock. Also, these companies have a resilient business and a growing earnings base, which makes their payouts durable. Let’s delve into these stocks.
With a dividend-growth history of over 28 years, Enbridge is undoubtedly one of the safest dividend stocks to earn stable income, regardless of market conditions. Enbridge transports oil and natural gas and runs a regulated gas utility business. It also owns renewable energy assets, positioning it well to benefit from energy transition opportunities.
Its diversified asset base, high asset utilization rate, and long-term contracts help it generate solid DCF (distributable cash flow) in all market conditions and support its higher payouts. Also, power-purchase agreements, regulated cost-of-service tolling frameworks, and low-risk commercial arrangements bode well for its financial growth. Given its ability to deliver higher cash flows, the company is poised to enhance its shareholders’ value through increased dividend payments in the coming years.
Further, its investments in conventional and low-carbon energy assets position it well to capitalize on the future energy demand. Moreover, its solid secured utility projects and strategic acquisitions will drive its DCF per share and future dividend payments. Enbridge stock currently pays a quarterly dividend of $0.887 per share. This reflects a compelling dividend yield of about 7.6% (based on its closing price of $46.6 on August 23).
Like Enbridge, Fortis is another safe stock to earn worry-free income, regardless of where the market moves. The company operates 10 regulated utility businesses and generates most of its earnings from utility assets, which makes its payouts safe.
Impressively, it has raised its dividend for 49 consecutive years, owing to its predictable cash flows and growing rate base, which supports my bullish outlook and makes it a must-have income stock. The company’s $22.3 billion capital projects will help expand its rate base and drive future earnings and dividend payments. For instance, its investments will help grow its rate base at a CAGR (compound annual growth rate) of 6.2% through 2027, which, in turn, will support 4-6% dividend growth per annum during the same period.
Overall, Fortis’s low-risk business, regulated asset base, energy transition opportunities (growing portfolio of renewables), and solid track record of dividend payments make it attractive. Further, the visibility over future dividend growth is positive. The company offers a quarterly dividend of $0.565 a share, reflecting a yield of 4.2% based on the current market price of $53.63.
Income investors seeking safe stocks shouldn’t miss out on Toronto-Dominion Bank. This financial services company has a stellar history of dividend payments. It’s worth highlighting that Toronto-Dominion Bank has paid a dividend for over 166 years. Moreover, it increased the same at a CAGR of about 11% in the last 25 years. Besides the solid dividend payments history, its conservative payout ratio of 40-50% further supports my bullish outlook.
The bank has diversified revenue sources to drive its top-line growth. Meanwhile, leverage from higher sales and operating efficiencies fuels earnings growth. In addition, its high-quality assets, solid balance sheet, and accretive acquisitions bode well for future growth.
Investing in Toronto-Dominion Bank stock can help you earn a worry-free yield of 4.6%.