3 Stocks Ready for Dividend Hikes in 2024

These three Canadian stocks consistently increase their dividends each year, making them some of the best long-term investments.

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It’s no secret that dividend stocks are some of the best long-term investments. In fact, stocks that can consistently increase their dividends are often some of the best stocks on the market.

When a company consistently increases its dividend year in and year out, it provides investors with a constantly growing passive income stream. It also helps the share price grow, leading to attractive capital gains.

Furthermore, only a select few stocks have robust and reliable enough businesses to constantly increase the cash they’re paying out to investors. So not only are these stocks attractive due to the capital gains potential and passive income they provide, but they are also some of the most resilient stocks that you can have confidence buying and holding for the long haul.

So, if you’re looking for some of the best dividend stocks in Canada to buy now, here are three dividend aristocrats that you can expect will increase their dividend payouts in 2024.

Two of the top Canadian dividend aristocrat stocks

If you’re looking for top Canadian dividend stocks to buy now, two of the best on the market are Enbridge (TSX:ENB) and Fortis (TSX:FTS).

Both Enbridge and Fortis have essential business models and widely diversified operations, making them some of the most recession-resistant stocks on the TSX.

For example, Enbridge’s operations are crucial. It not only transports roughly 30% of all the crude oil produced in North America and 20% of the natural gas consumed in the U.S., but it also offers energy storage services and a massive utility business, and is consistently investing more money in growing its renewable energy portfolio.

Furthermore, because most of the assets it owns are long-life assets such as pipelines and there are such significant barriers to entry in the energy infrastructure industry, Enbridge is in a unique position and is consistently generating billions in cash flow, which is what ultimately funds the growing dividend.

For 29 consecutive years, it has increased its dividend payment while consistently investing more money in growing its operations, which will ultimately lead to consistent growth down the road.

And although it consistently increases its payout annually and offers such a large and attractive yield of roughly 7.5% today, that dividend is still highly safe. For example, according to Enbridge’s guidance, it expects to earn distributable cash flow (DCF) of $5.40 to $5.80 per share in 2024. Meanwhile, its annual dividend is just $3.66 per share, giving it a significant margin of safety.

Fortis is similar in many ways. It offers essential services, has significant barriers to entry, and its future revenue and earnings growth are highly predictable. This allows it to consistently increase dividends year in and year out regardless of the economic environment.

In fact, Fortis has the second-longest dividend growth streak in Canada at an unbelievable 50 straight years, which just goes to show how reliable it is and how well it can weather different economic environments. Today, it offers a yield of roughly 4.4%.

One of the best growth stocks on the TSX

In addition to Enbridge and Fortis, Dollarama (TSX:DOL) is another consistent dividend growth stock expected to increase its dividend in 2024. In fact, Dollarama typically increases its dividend in April, so we could get an announcement of that over the next few weeks.

The one main difference between Dollarama and the other two is that Dollarama pays out a much smaller dividend. While each of the three stocks pays back some of their earnings and reinvests the rest, Dollarama has a lot more growth potential than Fortis and Enbridge, so it returns less cash to investors and spends more on future growth.

That allows it to grow at a faster pace, making it ideal for investors with a longer investment horizon. But for those looking to earn as much passive income as possible, Dollarama’s roughly 0.3% yield likely won’t be enough.

Nevertheless, Dollarama is still one of the best stocks on the TSX, and as its growth potential slows down over the coming years, you can expect it to eventually start paying more money back to investors.

So, depending on your investment goals, Dollarama, Enbridge, and Fortis are three of the best high-quality dividend stocks to consider buying now and holding long-term.

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 Daniel Da Costa has positions in Enbridge. The Motley Fool recommends Enbridge and Fortis. The Motley Fool has a disclosure policy.

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