3 Top Dividend Stocks to Buy Hand Over Fist

These three dividend stocks are excellent buys right now, given their solid underlying businesses, superior dividend growth record, and high yields.

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Yesterday, Statistics Canada reported that Canada’s inflation rose 2.8% in February, lower than analysts’ expectation of 3.1%. Also, it was a decline from the previous month’s 2.9%. The signs of easing inflation have driven the equity markets higher, with the S&P/TSX Composite Index up 4.3% this year.

Meanwhile, analysts are predicting a global slowdown due to the impact of prolonged high-interest rates. Also, rising geo-political tensions are causes of concern. Amid the uncertain environment, investors should look to add quality dividend stocks to strengthen their portfolios and earn stable passive income. Besides, dividend stocks have historically outperformed the broader equity markets.

Here are three dividend stocks that you can buy hand over fist.

Telus

Amid the growing demand for telecommunication services due to digitization, Telus (TSX:T) would be my first pick. Supported by its stable cash flows due to recurring revenue streams, the company has returned $20 billion to its shareholders through dividends since 2004. Currently, it offers a quarterly dividend of $0.3761/share, with its forward yield at 6.73%.

Amid the rising demand, the company is expanding its 5G and broadband infrastructure, which could continue to drive its customer base and average revenue per user. Telus is also witnessing strong growth in its health services segment, Telus Health, amid organic growth and the acquisition of LifeWorks. The uptrend could continue amid increased adoption of telehealthcare services and improving synergies, such as cross-selling opportunities. Besides, the company’s management hopes for increased contributions from its other growth segments, TELUS International and TELUS Agriculture & Consumer Goods, this year.

Backed by these growth initiatives, Telus expects to raise its dividend at an annualized rate of 7 to 10% from 2023 to 2025. Meanwhile, its NTM (next 12 months) price-to-sales multiple stands at 1.6, making it an attractive buy.

TC Energy

TC Energy (TSX:TRP), which has been raising its dividend at an annualized rate of 7% since 2000, is another dividend stock to have in your portfolio. The company transports oil and natural gas across North America through its pipeline network. It has also invested in seven power-producing facilities, with a total capacity of 4.3 gigawatts.

With around 97% of its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) underpinned by rate regulation or long-term contracts, TC Energy’s cash flows are stable and predictable, allowing it to raise dividends consistently. It currently offers a juicy forward dividend yield of 7.03%.

After putting $5.3 billion of assets into service last year, TC Energy expects to put around $7 billion into service this year and has planned to invest $8.5 to $9 billion. Besides, it is working on spinning off its Liquids Pipeline segment, improving its flexibility, enhancing efficiency, and driving operational excellence. Excluding its Liquids Pipeline segment, the company’s adjusted EBITDA could grow at an annualized rate of 6% through 2026. So, management is confident of maintaining its dividend growth at an annualized rate of 3 to 5%, making it an attractive buy.

Fortis

Fortis (TSX:FTS) operates 10 regulated utility assets, meeting the electric and natural gas needs of 3.5 million customers across North America. Supported by its low-risk utility asset base, the company has delivered an average total shareholder return of 10.7% for the previous 20 years, outperforming the broader equity markets. Besides, it has rewarded its shareholders by raising its dividends for 50 consecutive years, with its forward yield currently at 4.42%.

Further, the utility company will invest $25 billion over the next five years, growing its rate base at an annualized rate of 6.3%. The rate base expansion and improving operating performance could boost its financials, thus allowing it to maintain its dividend growth. Meanwhile, the company’s management expects to increase its dividend at an annualized rate of 4 to 6% through 2028. FTS trades at an attractive NTM price-to-earnings multiple of 16.7. Considering all these factors, I believe Fortis would be an opportune buy for income-seeking investors.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Rajiv Nanjapla has no position in any of the stocks mentioned. The Motley Fool recommends Fortis and TELUS. The Motley Fool has a disclosure policy.

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