Investing in dividend stocks can be a sound strategy for various reasons. For example, dividend stocks offer a dependable source of consistent income. Moreover, companies renowned for their solid dividend payouts are typically well-established and financially sound, thereby enhancing the stability of your investment portfolio. Additionally, by reinvesting the dividends, one can acquire more shares of the same stock, which ultimately bolsters holdings and helps create wealth over time.
Thus, for those seeking to bolster their portfolios with fundamentally sound dividend-paying stocks, here’s a list of the top contenders.
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Fortis
With 50 years of consecutive dividend increases, Fortis (TSX:FTS) is one of the most reliable Canadian dividend stocks. The company runs a low-risk, regulated electric utility business that consistently generates dependable and growing cash flows, supporting its dividend distributions. Moreover, approximately 99% of its earnings stem from diversified utility businesses, indicating that its payouts are well-protected.
The company’s $25 billion in capital projects are poised to expand its rate base and drive its future earnings. Additionally, the utility stands to benefit from the energy transition opportunities. Fortis anticipates its rate base to grow at a compound annual growth rate (CAGR) of 6.3% over the next five years, facilitating a 4-6% annual dividend increase during the same period. With its strong track record of dividend payouts, clear outlook on future dividends, and resilient business model, Fortis emerges as a standout choice among Canadian dividend stocks.
Enbridge
Like Fortis, Enbridge (TSX:ENB) is another dependable stock to earn regular dividend income. Enbridge boasts an impressive dividend payment history of 68 years. Moreover, it uninterruptedly increased its dividend for over 28 years. This makes Enbridge one of the best dividend stocks for investors seeking a reliable income stream.
The energy infrastructure company benefits from a diversified portfolio that reduces risk. Moreover, high utilization of its assets, regulated cost-of-service tolling frameworks, and long-term contracts drive its distributable cash flow (DCF) and dividend payouts. Additionally, Enbridge gains from the low-risk commercial arrangements and power-purchase agreements that stabilize its cash flows. With its high-quality conventional and renewable assets, Enbridge is poised to deliver solid DCF and enhance its shareholders’ return through higher dividend payments.
Toronto-Dominion Bank
Toronto-Dominion Bank (TSX:TD) is one the best dividend stocks in Canada right now, and there are compelling justifications for this distinction. This financial services giant has a remarkable track record of dividend payouts spanning more than 166 years. Notably, it has consistently grown its dividend at an impressive CAGR of approximately 11% over the past 25 years.
Toronto-Dominion Bank’s diversified revenue base, high-quality assets, and focus on improving efficiency support its earnings and dividend payments. Moreover, its robust balance sheet and strategic acquisitions position it well to consistently grow its earnings base. In summary, TD’s impressive track record of consistent dividend payments, growing earnings base, and a conservative payout ratio of 40-50% position it as an appealing choice for income-oriented investors.
Canadian Natural Resources
Canadian Natural Resources (TSX:CNQ) is the final stock on this list. The company is among the world’s leading crude oil and natural gas producers. It generates robust cash flows which, in turn, enables it to bolster shareholder returns by offering increased dividend payments. Remarkably, Canadian Natural Resources has increased its dividend for 23 consecutive years, reflecting a CAGR of 21%.
Looking ahead, Canadian Natural Resources’ high-quality portfolio, cost discipline, and robust balance sheet position it well to generate strong cash flows to support future dividend payments. Moreover, its strategic investment in natural gas assets augurs well for future growth and dividend payments.
