Dividend-growth stocks are some of the best ways to build impressive wealth over the course of many years. Sure, it’s more tempting to go for the higher-yielding plays that promise more passive income in the near term.
However, if you seek the best of both worlds (think growth and dividends), I believe that long-term investors ought to pay closer attention to the market’s top dividend growers. At the end of the day, the only thing better than a fat dividend (that may grow at a slower rate) is a relatively fair dividend that stands to grow by leaps and bounds.
So, if you’re a young investor who doesn’t need cash dividends (or distributions) to live off of, I’d encourage you to check out the market’s top-tier dividend-growth plays. Though some of them may not have the most bountiful payouts today, their stable growth trajectories could help build a dividend that stands to swell at a decent pace every single year. In that regard, I think dividend growth plays are a must-have for the core of any Tax-Free Savings Account, First Home Savings Account, or Registered Retirement Savings Plan.
Let’s check out two of my favourite dividend growers and see how they stack up in 2024 — a year that’s sure to see a good amount of bumps in the road.
CN Rail
CN Rail (TSX:CNR) is one of the stocks you should look to buy whenever shares head south in a hurry. Though macro circumstances and the firm’s high degree of economic sensitivity may have some hitting the panic button in certain instances, I believe that it’s tough to top shares of CNR when it comes to dividend-growth plays.
At writing, shares sport a 1.87% dividend yield — not at all competitive with most other high-yield dividend stocks out there. In any case, it’s unwise to ignore the dividend or the firm’s impressive dividend-growth profile. Even if 2024 sees a recession, investors can be ready for dividend raises. And when times are good, perhaps a bit more of a raise could be in the cards. In any case, CNR stock is one of the best dividend-growth stocks in Canada.
The longer you hold the stock, the more powerful the dividend factor comes into play! At $165 and change, I view the stock as a terrific deal, whether you’re a dividend hunter or a new investor looking to buy your very first stock.
Alimentation Couche-Tard
Alimentation Couche-Tard (TSX:ATD) isn’t exactly what you’d think of when you hear of dividends. The dividend yield sits at a mere 0.75% right now. Indeed, the main star of the Couche-Tard show is the capital gains potential. That said, Couche-Tard has been growing its earnings at an incredible pace over the past few years. And those earnings gains have translated into fairly frequent dividend increases.
So, while the sub-1% yield seems to suggest Couche-Tard is an appreciation play, I’d argue that it’s a magnificent dividend grower to hang onto for decades. In 15 years or more, the dividend will swell in size and help power a bountiful passive-income stream.
