4 Top Stocks With High Dividend Growth to Buy in 2023 and Hold Forever

These four stocks have raised their dividends at a healthy rate, making them attractive buys.

| More on:
potted green plant grows up in arrow shape

Image source: Getty Images

With the Federal Reserve keeping its interest rates unchanged for the second consecutive time, investors are optimistic that this year’s rate hikes are over. The optimism has raised the S&P/TSX Composite Index by 1.1% yesterday. However, the Federal Chairman has announced that he is unclear whether the central bank’s restrictive financial initiatives were enough to bring inflation down to its target of 2%. So, he has stated that the bank will observe the upcoming job and price data to take necessary action in its next policy meeting in December.

Given the uncertainty, investors can buy quality dividend stocks to strengthen their portfolios and earn a stable passive income. Meanwhile, the following four stocks have increased their dividends consistently, thus depicting the strength in their underlying businesses.

Enbridge

Enbridge (TSX:ENB) would be my first pick, given its excellent track record of raising dividends for the previous 28 years at a CAGR (compound annual growth rate) of over 10%. Its regulated midstream assets, long-term take-or-pay contracts, and inflation-indexed agreements deliver stable cash flows, thus allowing the company to raise dividends consistently. Its forward yield stands at a healthy 7.9%.

Further, the company is looking at expanding its natural gas utility business by acquiring three businesses in the United States for $19 billion. Additionally, it is continuing with its $19 billion secured capital program, which could continue to drive its financials in the coming years. So, I believe the growth in cash flows from low-risk utility businesses could allow Enbridge to continue its dividend growth.

Canadian Natural Resources

Second on my list is Canadian Natural Resources (TSX:CNQ). Today, the oil and natural gas producer reported its third-quarter performance, with the company producing an average of 1.39 million barrels of oil equivalent per day, a record production volume for both liquids and natural gas. Although crude oil price rose 28% during the quarter, its average realization price remained lower than the previous year’s quarter. So, its adjusted EPS (earnings per share) and adjusted fund flows declined by 16.3% and 10%, respectively.

The company’s management has also announced an 11% increase in its quarterly dividend to $1.00/share, marking the 24th year of consecutive dividend hike at an annualized rate of 21%. Meanwhile, its forward yield stands at 4.54%. With oil prices projected to remain elevated, increased production could drive CNR’s financials, thus allowing it to reward its shareholders with consistent dividend increases.

goeasy

goeasy (TSX:GSY) is my third pick. The subprime leasing and lending services company has been paying dividends for the previous 19 years while raising the same for the last nine years at an annualized rate of over 30%. The company has increased its revenue and adjusted EPS (earnings per share) in double digits for the last 20 years. Despite the strong growth, the company’s market share in the $200 billion subprime credit market remains minimal, thus offering high growth prospects.

Meanwhile, the company’s management has provided an excellent three-year outlook, with its loan portfolio projected to reach $5.1 billion by 2025, representing a 59.4% increase from its current levels. Also, its revenue could grow at an annualized rate of 16% while delivering operating margins of over 36%. So, I believe goeasy could continue its dividend growth, making it an attractive buy.

TC Energy

TC Energy (TSX:TRP) is my final pick. The midstream energy company generates around 95% of its adjusted EBITDA from regulated assets and long-term contracts, thus delivering stable cash flows. Amid stable and predictable cash flows, the company has been raising its dividend since 2000 at an annualized rate of around 7%. Its forward yield stands at a juicy 7.67%.

Amid the rising interest rates, the Calgary-based company is focusing on deleveraging initiatives to strengthen its balance sheet. Last month, it sold its 40% stake in Columbia Gas Transmission and Columbia Gulf Transmission for $5.3 billion, with the net proceeds utilized to lower its debt levels. The company is working on spinning off its liquids segment, thus allowing both companies the flexibility to pursue their growth objectives.

Further, the company’s secured capital program could grow the company’s adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) at an annualized rate of 6% through 2026. Meanwhile, the spin-off could increase the growth rate to 7%. Amid these growth prospects, TC Energy’s management is confident of raising its dividend by 3-5% annually through 2026.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Rajiv Nanjapla has no position in any of the stocks mentioned. The Motley Fool recommends Canadian Natural Resources and Enbridge. The Motley Fool has a disclosure policy.

More on Dividend Stocks

calculate and analyze stock
Dividend Stocks

4 Fabulous Dividend Stocks to Buy in July

Are you looking for long-term income? These four dividend stocks should not only provide you with value in July but…

Read more »

financial freedom sign
Dividend Stocks

5 Steps to Financial Freedom for Canadian Millennials

Follow these steps and nothing can stop Canadian millennials from achieving their early retirement dreams.

Read more »

Investor wonders if it's safe to buy stocks now
Dividend Stocks

We’re Only Getting Older: A Top TSX Stock That Benefits From an Aging Population

For a bet on the aging population, consider this small-cap stock with growth potential.

Read more »

Growing plant shoots on coins
Dividend Stocks

Yield Today, Growth Tomorrow: 3 Stocks to Keep Building Your Wealth

For investors seeking yield today and growth tomorrow, these top Canadian dividend stocks are certainly worth considering right now.

Read more »

Payday ringed on a calendar
Dividend Stocks

This 10.72% Dividend Stock Pays Cash Every Month

This dividend stock remains a consistent, defensive dividend producer that will give up over 10% in income each and every…

Read more »

Blocks conceptualizing Canada's Tax Free Savings Account
Dividend Stocks

TFSA Investors: 2 Standout Domestic Stocks With 7% Yields

These top dividend-growth stocks look oversold.

Read more »

Dividend Stocks

2 Dividend Stocks to Double Up on Right Now

Despite their recent declines, the long-term growth outlook of these two top dividend stocks remains strong, which could help their…

Read more »

A close up color image of a small green plant sprouting out of a pile of Canadian dollar coins "loonies."
Dividend Stocks

Growth Stocks vs. Value Stocks: Which Should You Choose?

There are growth stocks and value stocks, but there are also growing value stocks that fit into both sides of…

Read more »