Equity markets have turned volatile over the last few weeks. With inflation remaining higher, investors fear that interest rates could remain elevated for a longer period than earlier expected, thus leading to a correction. The Canadian benchmark index, the S&P/TSX Composite Index, has fallen 6.8% from last month’s highs.
Amid the volatility, investors can go long on quality dividend stocks to strengthen their portfolios and earn a stable passive income. Meanwhile, the following three stocks have raised their dividends consistently, depicting their strong underlying businesses and predictable cash flows. So, these three stocks could be excellent buys right now.
Enbridge
Enbridge (TSX:ENB) is one of the top dividend stocks to have in your portfolio. It has paid dividends every year since going public in 1953 and also raised its dividends yearly for the previous 28 years at an annualized rate of around 10%. The midstream energy company generates about 98% of its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) from regulated assets or long-term contracts. So, it earns stable and predictable cash flows, allowing it to raise its dividends consistently.
Meanwhile, the midstream energy company is expanding its asset base, with $19 billion in secured growth projects. It expects to put around $3 billion of projects into service this year. Also, the company recently signed an agreement to acquire three natural gas utility companies in the United States, which could increase its adjusted EBITDA from gas utilities to 22%. These acquisitions could lower its business risks while delivering long-term value for its shareholders. So, the company is well-positioned to continue with its dividend growth. Also, its forward dividend yield currently stands at a juicy 8.16%, making it an attractive buy.
Canadian Natural Resources
Second on my list would be Canadian Natural Resources (TSX:CNQ), which has raised its quarterly dividends at a CAGR (compound annual growth rate) of 21% for the previous 23 years. Its forward yield also stands at a healthy 4.34%. Oil prices have increased over the last few weeks amid supply concerns due to the extension of voluntary production cuts by Saudi Arabia and Russia, and hurricanes in the Gulf of Mexico hampering oil production. Besides, rising Chinese demand has also contributed to strengthening oil prices.
Going forward, analysts are bullish on oil and projecting oil prices to remain elevated in the near-to-medium term. Higher oil prices could be beneficial to oil-producing companies, including CNQ. Further, the company expects to increase its production this year, with the midpoint of its guidance representing a 5.5% increase from the previous year. Along with higher oil prices and increased production, lower debt levels and share repurchases could boost its financials in the coming years, thus supporting its dividend growth.
goeasy
My last pick would be goeasy (TSX:GSY), which offers leasing and lending services to subprime lenders. The subprime lender has delivered solid performance over the previous 10 years, with its revenue and adjusted EPS (earnings per share) increasing at a CAGR of 17.7% and 29.5%, respectively. Supported by its solid financials, GSY has increased its dividends at an annualized rate of over 30% for the previous nine years. With a quarterly dividend of $0.96/share, its forward yield stands at 3.57%.
Despite the strong growth, the company has acquired a small percentage of the $200 billion subprime credit market, thus offering excellent long-term growth potential. Meanwhile, the subprime lender is working on improving its products, pricing, and cost structure to lower the impact of reducing the maximum allowable interest rate to an annual percentage rate (APR) of 35% from 47%. These initiatives could boost goeasy’s financials, thus allowing it to continue its dividend growth. So, I believe the company would be an ideal buy in this volatile environment.
