The TSX has several top dividend-paying companies that consistently return cash to their shareholders regardless of the economic situation. The resiliency of their payouts makes these Canadian stocks compelling investments for starting a passive-income stream.
For example, regulated electric utility company Fortis has uninterruptedly raised its dividend for 50 years. Fortis’s solid dividend-growth history, low-risk business model, and predictable cash flows make it a top stock for earning worry-free passive income. Investors could keep an eye on Canadian Natural Resources for its very high dividend-growth rate. CNQ has increased its dividend for 24 consecutive years. Meanwhile, its dividend has increased at a compound annual growth rate (CAGR) of 21% during the same period.
While both Fortis and Canadian Natural Resources are top stocks for passive-income investors, I’ll focus on a dividend stock with a stellar dividend payment and growth history as well as a high yield. Also, this fundamentally strong stock offers visibility over its future earnings, implying it could continue to enhance its shareholders’ returns through higher dividend payments with each passing year.
The super dividend stock
Speaking of the super dividend stock, Enbridge (TSX:ENB) appears to my mind. This energy infrastructure company transports and exports oil and gas. The company has paid dividends for nearly seven decades and increased its dividend at a CAGR of 10% for about three decades (29 years, to be precise).
The company’s stellar payout history shows its commitment to return cash to its shareholders and the resiliency of its business model. It currently pays a quarterly dividend of $0.915 ($3.66 annualized), translating into a lucrative yield of 7.5% based on its closing price of $48.57 on March 11.
Why is Enbridge a dependable income stock?
Enbridge’s diversified cash flows, solid organic growth, sustainable payout ratio (60-70% of distributable cash flow, or DCF), and visibility over its future earnings growth make it a dependable income stock. The company benefits from the high utilization of its assets, which drive its top and bottom lines and DCF per share.
Further, Enbridge continues to expand its conventional and renewable asset base, which positions it well to capitalize on future energy demand. Moreover, Its power-purchase agreements, regulated cost-of-service tolling frameworks, and inflation-protected earnings lay a strong foundation for future dividend growth.
Thanks to solid organic growth, benefits from secured capital projects, and accretive acquisitions, Enbridge’s management expects to grow its earnings per share (EPS) by 4-6% annually through 2026. Beyond 2026, the company’s bottom line and DCF per share are forecasted to grow by about 5%. This implies that Enbridge could continue to grow its dividend in line with the DCF per share.
Bottom line
Enbridge’s dividend-growth history, compelling yield, solid business model, ability to consistently grow its earnings, and sustainable payout ratio make it a super dividend stock for passive income. Further, based on its quarterly dividend of $0.915, investors can earn a passive income of $45.75/quarter or $183/year by buying 50 shares of Enbridge.
| Company | Recent Price | Number of Shares | Dividend | Total Payout | Frequency |
| Enbridge | $48.57 | 50 | $0.915 | $45.75 | Quarterly |
