3 Stocks Ready for Dividend Hikes in 2024

Here’s why quality dividend growth stocks such as Enbridge should be part of your shopping list in 2024.

| More on:
Growing plant shoots on coins

Image source: Getty Images

Dividend growth stocks have historically outpaced the broader markets due to their ability to derive cash flows across market cycles. The best dividend stocks are those with an enviable history of raising their dividends over time, enhancing the effective yield in the process. It also suggests that these companies have grown earnings and cash flows, enabling them to deliver capital gains to investors as well.

Here are three TSX dividend stocks ready for hikes in 2024.

Enbridge stock

Among the most popular dividend stocks in Canada, Enbridge (TSX:ENB) has raised dividends each year since 1995. These payouts have risen by 10% annually for the last 28 years, allowing Enbridge to pay shareholders a forward yield of 7.5%.

Despite an uncertain macro environment, Enbridge will raise its quarterly dividend payout to $0.915 per share in 2024, up from $0.888 per share in 2024.

A majority of Enbridge’s cash flows are tied to long-term contracts. Moreover, these contracts are adjusted to inflation, making the TSX giant almost immune to daily fluctuations in commodity prices.

A stable earnings base and robust capital growth program coupled with a sustainable payout ratio should allow Enbridge to keep raising dividends in 2024 and beyond. Priced at 16 times forward earnings, it also trades at a discount of 10% to consensus price target estimates.

Vermilion Energy stock

Another energy stock on the list is Vermilion Energy (TSX:VET), which is engaged in the acquisition, exploration, development, and production of petroleum and natural gas in North America, Europe, and Australia.

It currently pays shareholders a quarterly dividend of $0.10 per share, translating to a forward yield of 2.5%. In 2024, Vermilion Energy has increased dividends by 20% to $0.12 per share.

The company forecasts operating cash flow at $1.3 billion and free cash flow at $700 million in 2024, indicating its capital expenditures should be roughly $600 million. Vermilion expects free cash flow to increase by 40% year over year this year and will distribute less than $80 million in dividends to investors.

With a payout ratio of less than 20%, Vermilion Energy can easily increase its dividends by a significant margin at current oil prices.

Priced at 4.2 times forward earnings, VET stock trades at a discount of 56% to consensus price target estimates.

EQB stock

The final stock on my list is EQB (TSX:EQB), which currently offers shareholders a dividend yield of 1.82%, given its annual dividend of $1.60 per share.  In September 2023, EQB paid shareholders a dividend of $0.38 per share and increased the payout by 5% to $0.40 per share.

In the last 10 years, EQB’s dividends have risen by 17.5% annually, making it one of the best dividend growth stocks in Canada.

Despite a tepid lending environment, EQB grew its loans under management and earnings in Q3. It also increased non-interest revenue and is on track to improve adjusted earnings from $9.40 per share in 2022 to $13.10 per share in 2024.

Priced at 6.8 times forward earnings, EQB stock is really cheap, given that adjusted earnings are forecast to rise by 19.5% annually in the next five years.

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 Aditya Raghunath has positions in Enbridge. The Motley Fool recommends EQB, Enbridge, and Vermilion Energy. The Motley Fool has a disclosure policy.

More on Dividend Stocks

Canadian Dollars
Dividend Stocks

For a Shot at $5,000 in Annual Passive Income, Buy 1,975 Shares of This TSX Stock

Are you looking to earn steady income? While there is no certainty in stocks, this stock can give you a…

Read more »

Target. Stand out from the crowd
Dividend Stocks

1 Magnificent Canadian Dividend Stock With 33% Upside to Buy and Hold Forever

Dividend stock Brookfield Business Partners LP (TSX:BBU.UN) is a powerhouse of growth, with even more to come in 2024.

Read more »

top TSX stocks to buy
Dividend Stocks

Passive Income: How Much to Invest to Get $6,000 Each Year

TSX energy stocks such as Enbridge can help you earn a passive stream of recurring income.

Read more »

protect, safe, trust
Dividend Stocks

Income Investors: 2 Safe Dividend Stocks to Own for Passive Income for Years

Long-term passive-income stocks should ideally offer enough dividend growth to counteract inflation while preserving or growing your capital.

Read more »

analyze data
Dividend Stocks

The 1 Best Growth Stock on the TSX Today

Fairfax Financial Holdings (TSX:FFH) stock took a hit, but it's still a great growth play for the long-term.

Read more »

Happy family father of mother and child daughter launch a kite on nature at sunset
Dividend Stocks

Got $10,000? That’s All the Start-Up Funds You Need to Get Money for Doing Nothing 

Have you been delaying long-term investments for later? Investing money while you are working can help money work for you.

Read more »

Senior Man Sitting On Sofa At Home With Pet Labrador Dog
Dividend Stocks

Buy 32 Shares in This Glorious Dividend Stock and Create $1,074.88 in Passive Income

This dividend stock is also a growth stock you're going to want on your side over the next year and…

Read more »

Senior Man Sitting On Sofa At Home With Pet Labrador Dog
Dividend Stocks

Retirees: 2 Dividend Stocks With High Yields to Buy for 2024

These TSX dividend stocks raised their distributions for 2024 and now offer high yields.

Read more »