Investing in top dividend stocks can help investors earn steady passive income even amid wild market swings. While the fundamentally strong dividend stocks provide worry-free income, their growing earnings base and well-established businesses enable them to deliver decent capital gains over the long term. Also, you don’t need a large amount of capital to start investing in income stocks.
With this backdrop, let’s look at three no-brainer dividend stocks to buy now for less than $200.
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Enbridge
Enbridge (TSX:ENB) is one of the best Canadian stocks to start a passive-income stream. This energy infrastructure company has an impressive track record of dividend payment and growth. Notably, Enbridge has paid and increased its dividend, even amid the pandemic when most energy companies either reduced or temporarily suspended dividend payments.
To be precise, this energy company has paid a dividend for over 69 years. Moreover, Enbridge increased its dividend for 29 consecutive years. It offers a compelling yield of 7.8% (based on its closing price of $46.93 on February 13). Further, its target payout ratio of 60-70% of distributable cash flow (DCF) is sustainable in the long term.
Enbridge’s diversified revenue streams, power-purchase agreements, and cost-of-service tolling arrangements position it well to deliver strong DCF. Furthermore, its multi-billion secured capital projects, growing renewable portfolio, and strategic acquisitions will likely drive its cash flows and dividend payouts.
Fortis
Like Enbridge, income investors could consider investing in the electric utility company Fortis (TSX:FTS) stock. It operates a defensive business, generates predictable cash flows, and adds stability to your portfolio as it’s a low-volatility stock. What stands out is that Fortis has increased its dividend for 50 consecutive years. Further, its payouts are well-protected as the company earns most of its earnings through regulated assets.
Fortis’s cash flows will likely benefit from the company’s growing rate base. It expects its rate base to expand at a CAGR of 6.3% through 2028 and reach $49.4 billion. During the same period, the utility giant expects to grow its dividend by 4 to 6% per annum.
With its low-risk business, growing cash flows, visibility over future dividend payouts, and a decent yield of 4.5%, Fortis is a must-have passive-income stock.
Toronto-Dominion Bank
Leading Canadian banks are known for their stellar dividend payment history and are attractive investments for income investors. Among the large banks, investors could consider investing in the shares of Toronto-Dominion Bank (TSX:TD).
This financial services company has been paying a dividend for an impressive 167 years. Furthermore, its dividend has grown at an average annual growth rate of 10% since 1998. Additionally, Toronto-Dominion Bank maintains a well-covered payout ratio of 40-50%, which is sustainable in the long term.
Its diversified revenue streams, ability to grow loans and deposits, strong credit performance, emphasis on enhancing efficiency, and solid balance sheet will likely boost earnings and future dividend payouts. Further, the bank’s focus on accretive acquisitions will likely accelerate its growth rate. The financial services company currently offers a lucrative dividend yield of 5.1%.
