Investing in dividend-paying stocks could be an excellent strategy for investors looking for regular income and decent capital gains in the long term. Thankfully, the TSX has several fundamentally strong stocks with growing earnings and cash flows that offer reliable and growing dividends with well-covered payouts.
However, as dividend payments are not guaranteed, it is essential to diversify your portfolio to spread risk and earn consistent income under all market conditions.
Against this backdrop, let’s look at the best dividend stocks in Canada right now.
Enbridge (TSX:ENB) is undoubtedly one of the best dividend stocks for investors seeking a reliable income stream. This energy infrastructure company has uninterruptedly grown its dividend for 29 consecutive years. The company anticipates its distributable cash flow (DCF) to grow at a CAGR (compound annual growth rate) of around 4% through 2024, while Enbridge projects its dividend to grow at a CAGR of about 3% over the same period. Further, it plans to keep its dividend-payout ratio within 60-70% of DCF.
Enbridge’s highly diversified asset base, utility-like cash flows, and long-term contracts position it well to generate solid DCF, enabling it to grow its payouts. Further, its regulated cost-of-service tolling framework, high utilization of assets, and multi-billion-dollar secured capital program augur well for growth.
Fortis (TSX:FTS) is another dependable dividend income stock, like Enbridge. This regulated utility company has an impressive dividend-growth history of 50 consecutive years. Furthermore, it expects to grow its annual dividend at a CAGR of 4-6% through 2028, which is encouraging.
The company’s growing earnings base, predictable cash flows, and solid rate base growth position it well to drive its dividend payments in the coming years. Moreover, its secured capital plan, robust transmission investment pipeline, and cleaner energy infrastructure investments will support its growth. Further, most of its income comes through regulated assets, implying its payouts are safe and sustainable in the long term.
Investors could consider buying the shares of Canadian Utilities (TSX:CU) to earn reliable dividend income. This utility company has hiked its dividend for the past 51 years. Its highly contracted assets and regulated earnings base provide the foundation for continued dividend growth. Moreover, the company aims to grow its future dividend payments in line with its sustainable earnings growth.
The company’s investment in regulated utility and secured capital growth projects will lead to a growth in rate base, which will eventually drive its earnings and cash flows. This will enable Canadian Utilities to enhance its shareholders’ value through higher dividend payouts.
Toronto-Dominion Bank (TSX:TD) is another compelling income stock. The financial services giant has continuously paid dividends for 167 years, making it one of Canada’s best dividend stocks. Further, the bank’s dividend has grown at a CAGR of approximately 10% for over two-and-a-half decades. Furthermore, it has a conservative payout ratio of 40-50%.
In the future, Toronto-Dominion Bank’s diversified revenue base, solid balance sheet, focus on improving efficiency, and accretive acquisitions will drive its earnings. This performance will enable Toronto-Dominion Bank to enhance its shareholders’ value via higher dividend payments.
Lastly, investors can consider Telus (TSX:T) to earn consistent dividend income. The telecom giant has consistently enhanced its shareholders’ returns through its multi-year dividend-growth program. It’s worth highlighting that Telus has distributed over $1.5 billion in dividends year to date and paid approximately $19 billion since 2004.
The company’s growing customer base, increasing average revenue per user, and lower churn support its earnings growth and drive its distributions. Further, expanding its 5G coverage and PureFibre footprint ensures future growth and higher earnings. This indicates that Telus could continue rewarding its shareholders with higher dividend payments in the coming years.