Investing in dividend stocks can help you boost passive income over time. Besides providing a steady-income stream, fundamentally strong dividend-paying companies add stability to your portfolio due to their solid earnings base.
Moreover, these stocks also have the potential to appreciate in value and deliver decent capital gains in the long term. With this backdrop, let’s look at the best dividend stocks in Canada right now.
Toronto-Dominion Bank
Leading Canadian bank stocks such as Toronto-Dominion Bank (TSX:TD) are among the most reliable bets for generating regular income. This financial services giant has continuously paid dividends for 167 years. Moreover, it has grown its dividend at a compound annual growth rate (CAGR) of approximately 10% since 1998. Besides its solid payment history, its conservative payout ratio of 40-50% is sustainable in the long term.
Toronto-Dominion Bank’s diversified income streams, focus on improving efficiency, steady credit performance, robust balance sheet, and accretive acquisitions position it well to continue to grow its earnings. This will enable the bank to enhance its shareholders’ value via higher dividend payments.
Canadian Utilities
Canadian Utilities (TSX:CU) is a top stock for earning worry-free dividend income. This utility company has the longest history of consistently growing its dividend. For instance, Canadian Utilities has increased its dividend for 51 consecutive years, which makes it one of the best dividend-paying companies.
Its highly contracted assets and regulated earnings base enable the company to grow its earnings in all market conditions and provide the foundation for continued dividend growth. Canadian Utilities continues investing in regulated utility and contracted assets, which will drive its future earnings and dividend payments.
Fortis
Next up is Fortis (TSX:FTS), which has raised its dividend for 50 consecutive years. This regulated utility company earns most of its earnings via regulated assets, implying its payouts are well protected. While Fortis has a stellar dividend payment history, its management is confident it will increase its dividend at a CAGR of 4-6% through 2028.
Looking ahead, its regulated assets will enable the company to deliver predictable cash flows that will support its payouts. Besides, Fortis expects its rate base to increase at a CAGR of 6.3%, which will drive its earnings and dividend payments.
Enbridge
Enbridge (TSX:ENB) is one of the best dividend stocks for earning a growing passive-income stream. This energy infrastructure company has paid a dividend for over 69 years and uninterruptedly increased the same for 29 consecutive years. While the company has a solid record of dividend payments, its payout ratio of 60-70% of distributable cash flows (DCF) is sustainable.
Enbridge’s highly diversified asset base and long-term contracts will enable it to deliver solid DCF and drive higher payouts. Further, its sustained investments in conventional and green energy assets position it well to capitalize on the energy demand. Moreover, its regulated cost-of-service tolling framework, high utilization of assets, and multi-billion-dollar secured capital program augur well for growth.
Canadian Natural Resources
Canadian Natural Resources (TSX:CNQ) is the final stock on this list. The company generates robust cash flows, which enables it to bolster shareholder returns by offering increased dividend payments. Remarkably, Canadian Natural Resources has increased its dividend for 24 consecutive years at a CAGR of 21%.
Canadian Natural Resources’s high-value reserves, diversified asset base, cost discipline, and strong balance sheet position it well to generate solid cash flows to support future dividend payments.
