The power of compounding is one of the most underestimated things in the world. Yes, things will start off slow. However, once you’re able to get that snowball rolling downhill, it’ll be clear just how fast your portfolio could snowball. Fortunately, experiencing that sort of thing is accessible to everyone. By investing in dividend stocks, you too could experience outstanding compounding action in your portfolio. In this article, I’ll discuss three great picks that could help you achieve that.
One of the best dividend stocks around
When it comes to investing in Canadian dividend stocks, Fortis (TSX:FTS) should always come to mind. This company provides regulated gas and electric utilities to more than three million customers across North America. Because utilities tend to be paid for on a recurring basis, companies like Fortis are able to take advantage of that reliable and predictable source of revenue.
Fortis has managed to increase its dividend distribution for 50 consecutive years. That gives it the second-longest active dividend-growth streak in the country and makes it impressive even among Canadian Dividend Aristocrats. Fortis has already announced its plans to continue raising its dividend through to at least 2028 at a rate of 4-6%.
A top Canadian dividend stock
Another Canadian dividend stock worth considering for your portfolio is Canadian National Railway (TSX:CNR). If you live in Canada, you should recognize this company. It may be one of the most well-known companies in the country. Operating nearly 33,000 km of track, Canadian National Railway’s dominance can be seen from British Columbia all the way to Nova Scotia.
Canadian National Railway has increased its dividend in each of the past 26 years. Like Fortis previously, that makes it a Canadian Dividend Aristocrat. Canadian National Railway is also notable for being one of 11 TSX-listed companies to maintain a dividend-growth streak of 26 years or more, making it an elite dividend payer. It should be noted that Canadian National’s dividend has grown at a rate of more than 15% over that period.
This stock has grown its dividend at a fast rate
Finally, we have goeasy (TSX:GSY). If you’ve never heard of this company, you should know that it operates two distinct business lines. The first of which is easyfinancial, which provides high interest loans to subprime borrowers. Second is easyhome, where you can buy home furniture on a rent-to-own basis. Because of the nature of its business, goeasy has been on a tear since the COVID-19 pandemic. The company has repeatedly seen revenues come in at record levels.
In terms of its dividend, goeasy may be one of the most impressive companies around. In December 2014, the company offered a quarterly dividend of $0.085 per share. Today, its quarterly dividend is an astonishing $0.96 per share. That represents a compound annual growth rate of about 31%, allowing shareholders to stay very much ahead of inflation.
