A significant advantage of investing in the stock market is that it enables you to earn your expected returns in the long term with less volatility. If you are a passive investor, you can invest in dividend stocks to generate passive income. Indeed, such a strategy can be very beneficial for long-term investors,
Here are two stocks you can invest in now to earn higher returns or dividends in the long term. Read on to learn about them in detail.
Toronto-Dominion Bank
Toronto-Dominion Bank (TSX:TD) is one of the largest Canadian banks that operates in three business segments: Canadian retail banking, wholesale banking, and U.S. retail banking. The bank serves a comprehensive chain of branch offices, ATMs, wealth advisors, and online portals.
The company’s massive market capitalization of roughly $150 billion and its international exposure (particularly in the U.S. market) makes this stock one I think is worth considering. For investors looking at a way to play the growth of the overall Canadian economy at a relatively attractive valuation multiple (less than 15 times earnings), TD stock certainly looks attractive.
On a total-return perspective, TD Bank also remains one of the best-performing Canadian stocks to buy. The company’s long-term chart tells a rather pretty growth picture over the long term. But what can get lost in the fray is the company’s dividend profile, which remains stellar. Outside of periods where TD was forced to hold its dividend steady, this is a company that has continually provided more value to shareholders in the form of dividends. With a current divdiend yield of more than 5%, this is a stock I think can easily provide double-digit annual returns for investors willing to buy this stock right now.
Fortis
Fortis (TSX:FTS) is a Canada-based company that owns and operates 10 utility transmission assets in Canada and the United States. The company serves around 3.4 million customers and has smaller stakes in electricity generation and multiple Caribbean utilities.
Fortis continues to dominate my focus when it comes to top dividend stocks, mostly due to the utility giant’s ability to raise its distribution continuously over time. For more than five decades, Fortis has raised its dividend each and every year. Notably, some of these dividend hikes have been material, with the company clearly placing a significant focus on shareholder return (while also managing capital investment and reinvestment strategies as well).
The company’s net adjusted earnings surged more than 11% year over year in Fortis’s fourth-quarter results to $3.09 per share. The company’s current dividend distribution of $2.36 annually (or 4.5% per year) is more than fully covered by one month’s worth of adjusted earnings. That’s a well-covered dividend and one with plenty of room for hikes moving forward.
This low-beta stock is also among the most defensive options for Canadian investors concerned about a potential recession. So, no matter the reason, I think Fortis is worth a look at current levels. That is, for income investors or defensive investors looking at options in this uncertain market.
