Creating multiple streams of passive income is the best way to accelerate your retirement plans and achieve financial independence. One low-cost strategy to begin a passive-income stream is by purchasing quality dividend stocks with an attractive yield.
It’s essential to identify a portfolio of stocks that generate cash flows across market cycles, allowing them to maintain dividends over time. Further, these payouts should be sustainable and ideally increase each year, enhancing the effective yield significantly.
Here are three safe dividend stocks TSX investors can own for the next decade.
BCE stock
A Canadian telecom giant, BCE (TSX:BCE), currently offers shareholders a dividend yield of 7.1%. The company pays investors an annual dividend of $3.87 per share, and these payouts have more than tripled in the last two decades.
After adjusting for dividends, BCE has returned 105% to shareholders since January 2014. Priced at 18 times forward earnings, BCE stock is not too expensive, given its earnings should expand by mid-single digits annually between 2024 and 2027.
In the last 12 months, the company’s investments in broadband networks and services, momentum in core telecom business operations, and a focus on multi-product bundling have driven earnings growth for BCE.
In the third quarter (Q3) of 2023, BCE increased adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) by 3.1% year over year. It also expanded profit margins by 90 basis points, showcasing its pricing power amid an uncertain macro backdrop.
Canadian National Railway stock
One of the most popular dividend stocks on the TSX is Canadian National Railway (TSX:CNR), which offers you a yield of 2%. While the dividend yield is not too high, CNR stock has raised these payouts by 20% annually since 2004, which is exceptional.
Moreover, it has returned 187% to shareholders via capital gains in the past decade. Since January 2004, its stock price has soared by a staggering 1,160%, easily outpacing the broader markets.
CNR ended 2023 with an operating ratio of 60.8%. This ratio showcases the company’s efficiency and compares its total operating expenses with sales.
CNR reported a free cash flow of $3.9 billion in 2023 while investing $3.1 billion in capital expenditures. The TSX heavyweight continues to invest in its rail fleet, track maintenance, and capacity expansions, which should drive future cash flows and dividends higher.
Brookfield Asset Management stock
The final dividend stock on my list is Brookfield Asset Management (TSX:BAM), which offers you a yield of 3.1%. An alternative asset manager, Brookfield Asset Management, reported US$565 million in fee-related earnings, while distributed earnings grew 8% to US$568 million.
These strong results showcase the resiliency and diversity of the company’s cash flows. Around 86% of its capital is long-term or perpetual in nature and a key driver of fee-related earnings.
Over the years, BAM has successfully raised capital from global institutional investors and deployed it across diversified cash-generating verticals such as clean energy, transportation, and midstream.
Priced at 27 times forward earnings, BAM stock is not too cheap, given its earnings and dividends are poised to grow at an attractive pace in the next few years.
