Investors looking for shares of dividend-paying companies they can hold for decades and generate worry-free passive income could concentrate on those capable of maintaining and increasing payouts in all market conditions. Further, investors should consider management’s commitment to return cash to shareholders, sustainability of the payouts, and attractive yield.
Thankfully, the TSX has several fundamentally strong stocks with a consistent track record of dividend payment and growth for decades. Further, these companies maintain sustainable payout ratios and are offering decent yields near the current levels.
With this background, let’s look at three Canadian stocks you can hold for decades.
Enbridge
Enbridge (TSX:ENB) is one of the top dividend stocks to buy and hold for decades. It engages in the transportation and distribution of oil and natural gas. ENB owns diverse revenue streams that enable it to generate solid distributable cash flow (DCF) to support its payouts.
What stands out is the management’s commitment to enhancing its shareholder’s value. Notably, Enbridge’s leadership sees growing its dividends as an essential aspect of its investor value proposition, implying it could continue to increase its dividend in the coming years.
The company has been paying dividends for over 69 years. Moreover, it has increased it for 29 consecutive years. Furthermore, it offers a yield of 7.8% based on its closing price of $47.14 on March 4.
The company’s diversified cash flows, continued investments in clean energy and conventional assets, power-purchase agreements, and regulated cost-of-service tolling frameworks provide a solid foundation for DCF growth. Further, its multi-billion-dollar projects are slated to come into service in the upcoming years, driving its cash flows and dividend payments.
Fortis
Investors could add shares of the electric utility company Fortis (TSX:FTS) to earn worry-free income that will likely grow with them. The company owns a low-risk, regulated utility business that generates predictable cash flows regardless of economic situation. This allows the company to increase dividend distributions, thereby enhancing shareholder returns. Also, its defensive business model makes its stock less volatile, providing stability to investors’ portfolios.
The company has an impressive dividend growth history, which supports my optimistic outlook. For instance, this utility company has uninterruptedly raised its dividend for 50 years. Furthermore, its distributions are protected by its regulated asset base.
Through its secured capital projects, Fortis continues to expand its rate base, which will drive its earnings and dividend payments. It expects its rate base to grow at an average annualized growth rate of 6.3% through 2028. During the same period, its dividend is forecasted to increase by 4-6% annually. Fortis stock currently offers a yield of 4.5%.
Canadian Utilities
With its stellar track record of dividend growth, Canadian Utilities (TSX:CU) is a must-have stock to buy and hold for decades to generate passive income. It operates a utility and energy infrastructure business with the lengthiest track record of dividend growth among all Canadian companies. Notably, Canadian Utilities has raised its dividend every year in the last 51 years.
Currently, CU stock pays a quarterly dividend of $0.453 a share, reflecting a yield of 5.8% based on the closing price of $30.79 on March 4.
Looking ahead, Canadian Utilities’s diverse revenue streams and contracted and regulated assets will enable the company to generate sustainable earnings and pay higher dividends. The company continues to invest in regulated utility and energy infrastructure projects, which will expand its earnings base and support dividend distributions.
