The Canadian stock market has several high-quality dividend-paying companies that consistently pay and increase their dividends regardless of the economic situation. Thanks to the resiliency of their dividend payouts, these Canadian stocks are a compelling investment for investors seeking passive income.
Consider Fortis (TSX: FTS) as an example. This regulated electric utility company has increased dividends for 50 consecutive years. Its resilient business model and stable cash flows ensure consistent returns for shareholders, regardless of market conditions. Similarly, passive income investors could consider investing in Canadian Natural Resources (TSX: CNQ), which has rapidly grown its dividend. This energy company has increased its dividend for 24 consecutive years. Moreover, CNQ’s dividend has sported a compound annual growth rate (CAGR) of 21% during the same period.
While Fortis and Canadian Natural Resources are undoubtedly top stocks for passive-income investors, I’ll focus on a company that has uninterruptedly increased its dividend for nearly three decades. Further, this company offers a higher yield than Fortis and Canadian Natural Resources. Moreover, it is well-positioned to increase its dividend at a healthy pace in the coming years. Let’s delve into this top Canadian stock to earn $2,000/year in passive income.
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Top stock that pays cash regardless of market conditions
Passive income investors could consider investing in Enbridge (TSX: ENB) stock. The energy infrastructure company has paid dividends for about seven decades. Further, it has raised its dividend for 29 consecutive years.
It’s worth highlighting that Enbridge paid and increased its dividend even amid the pandemic when several energy companies either stopped paying dividends or announced a cut to their payouts. This shows the resiliency of Enbridge’s payouts.
Besides its stellar dividend payment history and worry-free payouts, it currently offers a compelling yield of 7.5% based on its closing price of $48.96 on April 26. This compares favourably with Fortis and Canadian Natural Resources’ dividend yields of 4.4% and 3.9%, respectively.
What is Enbridge a dependable passive income stock?
Enbridge’s highly diversified revenue streams, high utilization rate of its assets, long-term contracts, power-purchase agreements, and arrangements to lower its volume and price risk position it well to generate solid distributable cash flows (DCF). These cash flows cover its payouts. Further, the company continues to invest and expand its conventional and renewable asset base. This two-pronged strategy enables the energy firm to capitalize on energy demand.
Besides growing organically, Enbridge focuses on accretive acquisitions that bolster its cash flows and support higher dividend payments.
Enbridge’s leadership expects the company’s earnings per share (EPS) to increase by 4 to 6% annually through 2026. Beyond 2026, Enbridge’s EPS and DCF per share are projected to grow at a CAGR of 5%. This implies that the energy company could continue to increase its annual dividend in line with the EPS and DCF per share. While its dividend is likely to grow at a mid-single-digit rate, its payout ratio (60 to 70% of DCF) is suitable in the long term.
In summary, its solid dividend payment and growth history, growing earnings and cash flows, management’s commitment to enhance shareholders’ returns, high yield, and visibility over payouts make Enbridge a dependable passive income stock.
Earn $2,000/Year
Enbridge is a reliable dividend stock that offers worry-free passive income. Based on its current quarterly dividend of $0.915 per share, investors can earn a passive income of over $500/quarter, or $2,000/year, by investing $26,800 in Enbridge stock.
| Company | Recent Price | Number of Shares | Dividend | Total Payout | Frequency |
| Enbridge | $48.96 | 547 | $0.915 | $500.51 | Quarterly |
