Investing in dividend stocks is an astute strategy, as investors can benefit from capital appreciation and earn a stable passive income. Also, dividend stocks have historically outperformed the broader equity markets with lower volatility. Having seen the advantages of dividend stocks, let’s look at my three top picks you can buy and hold for decades.
Enbridge
Enbridge (TSX:ENB) is one of the top dividend stocks to have in your portfolio due to its consistency in paying and raising dividends. The Calgary-based company transports oil and natural gas across North America through a pipeline network. It has signed long-term contracts with its clients. So, commodity price fluctuations will not substantially impact its financials, thus delivering stable and predictable cash flows.
The company has uninterruptedly paid dividends for 69 years and raised them for 29 consecutive years at a CAGR (compound annual growth rate) of 10%. ENB currently pays a quarterly dividend of $0.915/share and has a forward yield of 7.52%.
Further, Enbridge recently acquired East Ohio Gas Company and is working on acquiring two other natural gas utility assets in the United States, making it the largest natural gas utility company in North America. It is also expanding its midstream and renewable energy assets, and has plans to put around $8 billion of assets into service by the end of next year. Given Enbridge’s healthy growth prospects, increasing contribution from low-risk, utility assets, and healthy financial position, its future dividend payouts look safe. So, I believe Enbridge would be a worthy stock to buy and hold for decades.
Fortis
Another dividend stock that I am bullish on is Fortis (TSX:FTS), which has been raising its dividend for the last 50 years. The company operates 10 regulated utility assets across the United States, Canada, and the Caribbean, serving 3.5 million customers. With around 99% of its assets being regulated utility assets, the company’s financials are less susceptible to broader market conditions. Supported by its stable cash flows, the utility company has raised its dividends for 50 consecutive years. Meanwhile, its forward yield stands at a healthy 4.41%.
Further, the utility company is looking to expand its asset base and has planned to invest around $25 billion over the next five years. Amid these investments, its rate base could grow at a CAGR of 6.3% to $49.4 billion by 2028. The expanding rate base could boost its cash flows, thus allowing Fortis to continue its dividend growth. Meanwhile, the company’s management is confident of raising its dividend by 4 to 6% annually until 2028. So, I am bullish on Fortis.
Telus
Despite the weakness in the telecom sector, I have picked Telus (TSX:T) as my final pick. The CTRC (Canadian Radio-television and Telecommunications Commission) has mandated large telcos to share their fibre-to-the-home (FTTH) networks with reselling companies to maintain healthy competition. However, the announcement would discourage telcos from investing in building quality network infrastructure. Besides, rising interest rates have also weighed on the sector, given its capital-intensive business. Amid the weakness, Telus has lost around 25% of its stock value compared to its 52-week high.
The steep correction offers an opportune entry point for long-term investors. With inflation showing signs of easing, the central banks could initiate rate cuts. Besides, the demand for telecom services could only rise in this digitally connected world. Further, Telus’s other growth segments, such as Telus Health, TELUS International, and TELUS Agriculture & Consumer Goods, could continue to boost its financials in the coming quarters. Meanwhile, amid the recent correction, its dividend yield has increased to 6.95%, making it an excellent buy for long-term investors.
