Dividends are paid out of profits. Consequently, investors seeking consistent dividends could concentrate on shares of fundamentally strong companies capable of growing earnings across all market conditions. Additionally, one should opt for firms with a proven history of consistently increasing dividends and maintaining sustainable payout ratios.
Thankfully, the Canadian stock market has several dividend-paying stocks with a track record of dividend payment and growth for years. With this background, let’s look at three Canadian stocks that fit the bill.
Canadian Utilities
Canadian Utilities (TSX:CU) has maintained a consistent record of annual dividend increases for the past 51 years, the longest among all Canadian corporations. The company’s remarkable dividend-growth history and commitment to returning cash to its shareholders make it a top choice for investors seeking reliable dividends.
The firm’s highly contracted and regulated earnings asset base provides the foundation for continued earnings and dividend growth. Notably, the company currently offers a quarterly payout of $0.453 a share, which translates into a compelling yield of over 5.8% based on the closing price of $30.70 on March 15.
Canadian Utilities could continue investing in regulated utility assets, driving its rate base and earnings. Additionally, the company is focusing on commercially secured energy infrastructure capital growth projects. These strategic capital investments are anticipated to drive substantial earnings and cash flow growth in the foreseeable future, enabling Canadian Utilities to generate sustainable earnings and distribute higher dividends.
Fortis
Shares of the electric utility company Fortis (TSX:FTS) could be another solid addition to your portfolio for consistent dividend income. Much like Canadian Utilities, Fortis boasts an impressive track record of dividend growth. For instance, Fortis has increased its dividend for 50 consecutive years, making it a reliable investment to earn worry-free income.
Fortis operates a regulated utility business that consistently generates predictable cash flows, adding resilience to its financial performance and enabling it to enhance its shareholders’ returns through higher dividend distributions. Fortis stock is relatively less volatile, despite large market swings due to its durable earnings and defensive business model. Thus, it also adds stability to your portfolio.
It pays a quarterly dividend of $0.59, reflecting a dividend yield of 4.4%. The company is focused on expanding its rate base, which is expected to drive earnings and payouts. Fortis plans to grow its rate base at a compound annual growth rate (CAGR) of 6.3% through 2028, which will lead to an increase in its dividend at a CAGR of 4-6% during the same period.
Enbridge
Enbridge (TSX:ENB) is another dependable stock to earn steady income, regardless of market situations. The company transports oil and gas. Thanks to its higher asset utilization, diversified income streams, and contractual arrangements, Enbridge generates resilient distributable cash flow per share, which drives its payouts.
Notably, the company has paid dividends for 69 years. Meanwhile, it increased its dividend for 29 consecutive years at a CAGR of 10%. Enbridge offers a quarterly dividend of $0.915 per share, translating into a compelling yield of over 7.6%.
Enbridge’s resilient business, investments in conventional and renewable assets, multi-billion capital projects, and strategic acquisitions position it well to capitalize on energy demand and consistently grow its earnings and dividend payments.
