Investing in quality dividend stocks provides you an opportunity to create a stable stream of passive income at a low cost. Instead of chasing a high dividend yield, investors should try to identify a portfolio of stocks that have the potential to grow their cash flows and dividends every year, enhancing the effective yield over time.
Moreover, a widening earnings base translates to an appreciation in share prices, resulting in long-term capital gains for shareholders. Keeping these factors in mind, here are my top five dividend stocks for passive income investors to buy in April 2024.
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Brookfield Asset Management stock
Among the largest alternative asset management companies in the world, Brookfield Asset Management (TSX: BAM) offers you a tasty dividend yield of 3.84%. The company went public in late 2022 and has already surged over 20% in the last 17 months.
Brookfield invests in real estates that generate cash flows across market cycles allowing it to distribute a portion of its earnings to shareholders every quarter. BAM stock is positioned to outpace the broader markets given its adjusted earnings are forecast to grow by 17.3% annually in the next five years.
goeasy stock
One of the fastest-growing Canadian companies, goeasy (TSX: GSY), operates in the financial lending segment. In the last 20 years, goeasy has returned a staggering 3,490% to shareholders after adjusting for dividends.
Despite its monstrous gains, goeasy pays shareholders an annual dividend of $4.68 per share, translating to a yield of 2.7%. Priced at 10 times forward earnings, GSY stock is really cheap and should deliver robust returns to shareholders.
Canadian Natural Resources stock
An oil and gas heavyweight Canadian Natural Resources (TSX: CNQ) should be part of your dividend portfolio in 2024. CNQ pays an annual dividend of $3.85 per share, indicating a yield of 3.6%.
Canadian Natural Resources reported net earnings of $8.2 billion and adjusted funds flow of $15.3 billion amid an uncertain macro environment in 2023, allowing it to return more than $7 billion to shareholders via dividends and buybacks.
CNQ has raised its dividend payouts by 20% annually in the last 23 years, which is exceptional for a company part of the energy sector.
EQB stock
The fourth stock on my list is EQB (TSX: EQB), a mid-cap TSX bank. EQB pays shareholders an annual dividend of $1.68 per share, providing a forward yield of almost 2%. The bank has raised its dividends by 14% annually since 2004 and should continue to grow the payout going forward.
For example, in the last four quarters, EQB’s free cash flow totalled $108 million while it paid dividends worth $55 million, offering it enough flexibility to hike the payments in 2024 and beyond.
Enbridge stock
A list of Canadian dividend stocks would be incomplete without Enbridge (TSX: ENB), a well-diversified energy infrastructure company. Down 30% from all-time highs, ENB stock offers you a forward yield of more than 7.5%, making it quite attractive at the current valuation.
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Enbridge’s cash flows are predictable, fee-based, and indexed to inflation. This visibility has allowed the TSX giant to increase dividends by roughly 10% annually on average for the last 29 years.
