Investment in dividend stocks that consistently increase the payouts can help you start a growing passive-income stream. While several Canadian stocks pay and grow their dividends, investors should focus on the ones with fundamentally strong businesses and visibility over their future payouts.
So, if you plan to start a passive-income stream that will grow with you, consider investing in Brookfield Renewable Partners (TSX: BEP.UN), Fortis (TSX: FTS), and Telus (TSX: T). But before I discuss why these stocks are a compelling investment to earn solid passive income, it is important to highlight that dividend payouts are not guaranteed, and investors must focus on diversifying their portfolios. With this background, let’s delve deeper into the stocks.
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Brookfield Renewable Partners
Brookfield Renewable Partners stock is a lucrative investment to start a worry-free, growing passive-income stream. Brookfield owns a diversified portfolio of renewable energy assets with an installed capacity of 31,600 megawatts. Moreover, it has a development pipeline of about 131,900 megawatts, positioning it well to capitalize on the growing adoption of clean energy.
The company benefits from its long-term power-purchase agreements. Further, about 90% of its power-generation portfolio is contracted. This enables Brookfield Renewable to generate predictable and growing cash flows to support its payouts. The company has increased its dividend at an average annualized growth rate of 6% for over two decades. Moreover, Brookfield plans to grow its dividend by 5-9%, which is encouraging.
In the future, its highly contracted assets and continued investment in power technologies will enable it to generate strong cash flows and support higher payouts. Meanwhile, the stock offers an attractive yield of 5.3% (based on its closing price of $33.89 on September 12).
Fortis
Fortis is another must-have stock to create a growing passive-income stream. Fortis owns low-risk and regulated utility assets that generate predictable cash flows to support higher payouts. Further, as the company earns all of its earnings through these low-risk assets, its payouts remain well covered.
It is worth highlighting that the company has increased its dividend for 49 consecutive years. Moreover, it plans to grow its dividend by about 4-6% annually through 2027, reflecting a growing rate base.
Through its $22.3 billion capital plan, Fortis plans to increase its rate base at an annualized rate of 6.2% through 2027. This will drive its asset base and support continued earnings growth. By investing in this low-risk stock, one can earn a dividend yield of 4%.
Telus
Like Fortis, Telus is famous for enhancing its shareholders’ returns through higher dividend payments. Its ability to deliver profitable growth enables it to return substantial cash to its shareholders.
The company paid over $1 billion in dividends in the first half of 2023. Moreover, it has returned about $18.6 billion in dividends to its shareholders since 2004.
Under its multi-year dividend-growth program, Telus intends to grow the dividend by 7-10% annually through 2025. Moreover, it currently offers a juicy yield of 6.4%. Its growing customer base, lower churn rate, and focus on advancing its PureFibre footprint and 5G services augur well for growth and dividend payments.
