Investors seeking consistent income will find value in dividend stocks. However, one must exercise caution when investing in dividend-paying stocks. The reason is that dividend payouts are not guaranteed.
So, if you want to make regular income from your investments, spread your money across multiple stocks to reduce risk. Moreover, a smart way is to focus on shares of fundamentally strong firms that regularly pay and increase their distributions. Also, consider investing in shares of corporations that consistently grow their earnings, as this can lead to higher dividends in the future.
Based on these parametres, Fortis (TSX:FTS), Enbridge (TSX:ENB), and Toronto-Dominion Bank (TSX:TD) are excellent choices for investors looking for dependable passive income. With this background, let’s find out why these Canadian stocks are great income stocks. Additionally, let’s calculate how many shares you need to own to earn $500 in quarterly dividend income.
Fortis
Fortis is an excellent choice for investors looking to build a stable income portfolio. One key factor is the company’s low-risk and regulated electric utility business, which ensures steady cash flow generation and safeguards its payouts. Moreover, Fortis has a strong track record of consistent dividend payments and growth, instilling confidence among investors. Additionally, the company offers visibility regarding future payouts, making it a top stock to earn worry-free passive income.
Fortis has consistently increased its dividend for 50 years and offers a solid yield of over 4.2%. The company, through its multi-billion-dollar capital projects, plans to expand its rate base, which will drive payouts. Fortis anticipates growing its rate base by a compound annual growth rate (CAGR) of 6.3% through 2028, which sets the stage for a 4-6% annual dividend increase during the same period.
Enbridge
Like Fortis, investors can rely on Enbridge. The energy infrastructure company has a resilient business model and has been paying a dividend for over 68 years. Further, the company has increased its dividend at a CAGR of 10% in the last 28 years. Moreover, its target payout ratio of 60-70% of the DCF (distributable cash flow) is sustainable in the long term.
Enbridge could continue to increase its dividend in the coming years. Its diversified assets, long-term contracts, power-purchase agreements, and multi-billion-dollar secured projects will drive its DCF and dividend distributions. Moreover, its investments in conventional and renewable energy assets position it favourably to meet long-term energy demand. Enbridge stock currently offers a lucrative yield of 7.7%.
Toronto-Dominion Bank
Shares of the financial services giant Toronto-Dominion Bank are a reliable investment to generate regular income. With a remarkable dividend payment track record spanning 166 years, it stands out as one of Canada’s top dividend stocks. The bank has increased its dividend at a CAGR of around 11% over the past 25 years. Moreover, it maintains a conservative payout ratio of 40-50%.
Toronto-Dominion Bank is poised to benefit from its diversified revenue base. Further, its solid balance sheet, focus on driving operating efficiency, and strategic acquisitions will cushion its earnings and support its payouts. Currently, Toronto-Dominion Bank offers a dividend yield of 4.6%.
How to earn $500/quarterly
Fortis, Enbridge, and Toronto-Dominion Bank stocks are solid investments to create a resilient passive-income portfolio. Further, the table below shows that by allocating $12,200 to each of these stocks, investors can generate a quarterly passive income of over $500.
| Company | Recent Price | Number of Shares | Dividend | Total Payout | Frequency |
| Fortis | $56.75 | 215 | $0.59 | $126.85 | Quarterly |
| Enbridge | $45.72 | 266 | $0.887 | $235.94 | Quarterly |
| Toronto-Dominion Bank | $83.85 | 145 | $0.96 | $139.20 | Quarterly |
