Accumulating $10,000 for investment is no small achievement. While this sum may appear modest—merely a fraction of what’s needed to purchase a home or even a brand-new car—it is, in fact, an excellent starting point for Canadians eager to venture into investing and secure safe and attractive returns through dividends and capital gains.
To invest your money safely and generate consistent returns, there are two fundamental rules to follow.
First, it’s crucial to choose only high-quality stocks in sectors you understand well. This ensures a clear grasp of the business models you are investing in. Second, diversification is key. Spreading your investments across a variety of companies minimizes risk and enhances the potential for stable returns.
Therefore, starting with $10,000 is an ideal amount, as it gives you plenty of cash to find many different high-quality dividend stocks.
So, with that in mind, if you’ve got some cash you’re looking to put to work today, here are two high-quality companies that you can have confidence buying and holding in your portfolio and which can earn you safe and significant dividends for years.
One of the top Canadian stocks to buy for safe and reliable dividends
If you’re looking to invest your hard-earned money and want to buy a company that’s as safe and reliable as possible, utility stocks are an excellent choice. The majority of utility stocks are ultra-safe and recession resistant.
However, there’s no question that one of the very best Canadian stocks to buy for safe dividends is Fortis (TSX:FTS), the largest investor-owned gas and electric distribution utility in Canada.
The reason why utility stocks are well-known as some of the safest and most reliable businesses you can invest in is the fact that they offer services which are essential. These services, such as gas and electricity distribution, see very little impact from a weakening economy, making utility stocks some of the most recession-resistant businesses you can buy.
Furthermore, the industry is highly regulated by governments, making the revenue, earnings and, consequently, the dividend that these stocks will pay highly predictable.
Not to mention, with Fortis being such a large and well-diversified company, operating in 10 different jurisdictions, it’s certainly one of the best and most reliable utility stocks you can buy for safe dividends.
Plus, in addition to its impressive business and numerous utility operations, Fortis also has an incredible track record of both protecting investors’ capital and providing consistently growing returns.
In fact, it’s much less volatile than the broader market, and for 50 straight years now, Fortis has increased its dividend annually, another reason it’s one of the best utility stocks to buy today.
In just the last five years, its dividend has increased at a compounded annual growth rate of 5.6%. Furthermore, over the next five years, the company expects to increase its dividend between 4% and 6% annually.
Therefore, with Fortis stock trading off its highs and offering a dividend yield that’s now upwards of 4.3%, and with interest rates expected to decline soon, which could send Fortis to new highs, it’s certainly one of the best Canadian stocks to buy today for safe and reliable dividends.
A top energy infrastructure stock for passive income seekers
In addition to Fortis, another high-quality stock that consistently generates billions in cash flow, making it a reliable passive-income generator, is Enbridge (TSX:ENB), the massive energy infrastructure stock.
Enbridge is an ideal stock to buy for safe dividends for several of the same reasons as Fortis. First off, the services it provides are essential to the North American economy. In addition, its operations are well-diversified, helping to mitigate risk for investors.
Plus, the energy infrastructure industry has significant barriers to entry and many of Enbridge’s assets require little maintenance year to year, allowing it to consistently earn tonnes of cash flow that it can both invest in future growth and return to shareholders.
Like Fortis, Enbridge has a lengthy track record of consistent annual dividend increases that has lasted for almost three decades.
So, if you’ve got cash to invest and are looking to earn safe and attractive dividends for years to come, Enbridge and its current yield of roughly 7.3%, is certainly one of the best Canadian stocks to buy now.
