Investors planning to invest in dividend stocks for worry-free passive income could consider investing in shares of companies with resilient businesses and a growing earnings base to support their future payments.
So, if you have $500 to invest, let’s look at five fundamentally strong dividend-paying stocks to earn reliable passive income in all market conditions.
Canadian Utilities
Canadian Utilities (TSX:CU) is a must-have stock for investors seeking dependable income, regardless of market conditions. This utility company has the longest history of consistently growing its dividend. For instance, Canadian Utilities has raised its dividend for 51 consecutive years. Its regulated asset base and highly contracted assets generate solid earnings, supporting its payouts.
Canadian Utilities continues to invest in regulated utility and commercially secured energy infrastructure capital growth projects. This will drive earnings and cash flows and enable the company to enhance its shareholders’ value through higher dividend payments. The company remains upbeat and expects to grow dividends in line with sustainable earnings growth. Further, it offers a compelling yield of 6% (calculated on its closing price of $29.89 on February 14).
Fortis
Like Canadian Utilities, Fortis (TSX:FTS) is another reliable stock to start a growing passive-income stream. Fortis operates a defensive electric utility business. Moreover, it generates predictable and growing cash flows that drive its dividend payments. Thanks to its low-risk business, Fortis stock remains less volatile and will add stability to your portfolio. What stands out is the company has increased its dividend for 50 consecutive years.
While Fortis has a stellar dividend payment history, it offers visibility over future payouts. The company expects to grow its rate base at a CAGR (compound annualized growth rate) of 6.3% through 2028. This will enable Fortis to expand its earnings base and increase its dividend by 4-6% annually. Based on its closing price of $52.62 on February 14, Fortis stock offers a yield of 4.5%.
Enbridge
Investors could consider shares of energy infrastructure company Enbridge (TSX:ENB) for steady income. It has hiked its dividend for 29 consecutive years. Further, its dividend has grown at a CAGR of 10% during the same period. The company’s diversified revenue sources, contractual arrangements, and commitment to return cash to its shareholders support its higher payouts.
Its solid secured projects, investments in conventional and renewable energy assets, cost-of-service tolling arrangements, power-purchase agreements, and strategic acquisitions position it well to deliver solid distributable cash flows to support its payouts. Moreover, it offers a lucrative yield of 8.1%.
Canadian Natural Resources
Next up is Canadian Natural Resources (TSX:CNQ) stock, which has been rapidly growing its dividend. This oil and natural gas company raised its dividend for 24 consecutive years. Further, its dividend grew at a CAGR of impressive 21% during the same period.
The company’s ability to generate solid financials and focus on returning cash to its shareholders suggests that it could continue to enhance its shareholders’ value through higher dividend payments. Further, its strong asset base, high-value reserves, effective cost-control strategies, and low maintenance capital requirements will enable Canadian Natural Resources to generate solid free cash flows and boost its payouts.
Bank of Montreal
Investors seeking passive income for decades could consider investing in shares of Bank of Montreal (TSX:BMO). Notably, this financial services company has paid a dividend for 195 years. Moreover, its dividend sports a CAGR of 5% in the last 15 years. Its ability to consistently grow its earnings supports its payouts.
Its diversified revenue streams, growing loans and deposits, solid credit quality, and focus on improving operational efficiency will likely drive its earnings and dividend payments. The stock currently offers a yield of 4.8%.
