Investing and holding top dividend stocks can help you earn steady passive income for decades. Besides boosting your cash flows, these stocks add stability to your portfolio due to their growing earnings base and relatively resilient business model. In addition, these stocks can deliver decent capital gains over time, boosting your overall returns.
Against this background, Enbridge (TSX:ENB), Bank of Montreal (TSX:BMO), and Canadian Utilities (TSX:CU) are three such fundamentally strong stocks that fit the bill. These Canadian stocks have resilient dividend payouts and are committed to returning higher cash to their shareholders, making them a solid investment for the long haul. Let’s dig deeper.
Enbridge
Income investors should own Enbridge stock for its stellar dividend payment and growth history, growing earnings base, and management’s commitment to enhancing shareholders’ value. The company transports oil and gas, with its energy infrastructure assets strategically positioned between key supply basins and strong demand markets. This is why its assets witness high utilization, enabling the company to generate strong distributable cash flows (DCF) regardless of market conditions.
Furthermore, Enbridge’s management places a significant emphasis on enhancing shareholder value through consistent dividend growth. This commitment indicates the potential for continued dividend increases in the years ahead. With a targeted payout ratio of 60-70% of distributable cash flows (DCF), Enbridge’s dividend-growth prospects appear sustainable over the long term.
The company has uninterruptedly paid dividends for 69 years and increased them for 29 consecutive years. Moreover, the company’s earnings per share (EPS) and DCF per share are forecasted to increase at a compound annual growth rate (CAGR) of approximately 5% in the long term, enabling it to grow dividends at a similar pace. Meanwhile, ENB stock offers a compelling yield of 7.2%, near the current market price of $50.58.
Bank of Montreal
Income investors should own shares of leading Canadian banks for their ability to pay and maintain their dividends for more than a century. Meanwhile, Bank of Montreal stands out for its longest history of dividend payments among all Canadian stocks, making it a valuable addition to your portfolio.
For example, this leading financial service giant has paid dividends for over 195 years. Moreover, its dividend has a 15-year CAGR of 5%. The bank’s stellar dividend payouts stem from its growing earnings base. Bank of Montreal’s diversified revenue sources focus on credit quality, growing loans, and a solid deposit base, enabling it to deliver higher earnings.
The financial services company expects its earnings to increase at a CAGR of 7-10% in the medium term. Its growing earnings will drive its distributions. Moreover, its low payout ratio indicates that its distributions are safe and sustainable in the long term.
Canadian Utilities
Utility companies are famous for their durable dividend payments due to their defensive business model and predictable cash flows. Canadian Utilities is one such stock popular for its ability to consistently increase its dividend and enhance shareholders’ value, making it a must-have income stock.
This utility company boasts an uninterrupted dividend-growth history of 51 years, the highest among all TSX stocks. Further, it offers an attractive yield of 5.8%, near the current price levels.
Canadian Utilities continues to invest in regulated utility assets, which will likely expand its rate base and future earnings. The company’s focus on investing in commercially secured energy infrastructure capital growth projects will likely boost its earnings and dividends.
