For income investors, Canadian dividend stocks are a cornerstone of a reliable and growing passive-income stream. A handful of Canada’s top dividend stocks with a long history of paying and increasing their dividends have raised their regular payouts in May 2024. A few more could follow as the current earnings season draws out. Of particular interest are dividend raises at CT Real Estate Investment Trust (TSX:CRT.UN) or CT REIT, the TMX Group (TSX:X), and an expected payout increase from Canadian Western Bank (TSX:CWB) stock later this month.
The Dividend Aristocrats stand out for their commitment to growing dividends and boosting total shareholder returns. Let’s explore how much they raised payouts in May and why you may wish to buy them to make passive income.
Image source: Getty Images
CT REIT raises monthly distributions in May
CT REIT is a $1.5 billion Canadian real estate investment trust (REIT) with an ever-growing portfolio of 370 commercial properties across Canada. Its properties remain fully occupied in 2024, earnings surged by 43% during the first quarter, and its rental cash flow-generating portfolio remains robust — giving management and trustees confidence to continue raising dividends.
The REIT raised its monthly distributions by 3% on May 6, 2024, to $0.0771 per unit. The higher payout, effective with the July payout, should yield a juicier 6.7% annually. CT REIT is a Canadian Dividend Aristocrat to buy for monthly passive income, especially following 10 consecutive years of distribution increases.
Most noteworthy, CT REIT is one of Canada’s top dividend stocks paying one of the safest distributions in its asset class. It paid out 73.1% of its adjusted funds from operations (AFFO) during the first quarter of this year — an improvement from the 73.8% AFFO payout rate seen during the same period last year. Its debt level remains low and manageable, and the REIT keeps getting profitable orders for new retail space as its tenant, a financially strong Canadian Tire, expands its retail footprint.
TMX Group increases dividends by 6%
The TMX Group owns and operates key financial markets infrastructure for investment and trading, including the Toronto Stock Exchange. The stock exchange operator enticed its investors with a 6% dividend raise on May 6, 2024. The latest dividend raise marks the ninth consecutive year of dividend growth for TMX Group stock investors, and it was the fourth increase within the last two years.
The TMX Group stock can afford dividend raises following a decade of strong revenue, earnings, and free cash flow growth. The top Canadian dividend stock’s free cash flow has grown by nearly 75% during the past 10 years, following an 88% increase in revenue.
X Revenue (TTM) data by YCharts
A strong 208% gain in the TMX Group stock during the past decade makes the dividend yield low at 2% annually, but the dividend raised the total return for the period to almost 300%. The payout is well-covered, given a 49% historical earnings payout rate. Management has room to keep raising dividends for many more years, keeping the stock’s Dividend Aristocrat status intact.
Canadian Western Bank stock to raise dividend
Beaten-down regional bank Canadian Western Bank is evolving into a national financier as it widens its portfolios to Eastern provinces and diversifies its business away from Western Canada’s commodity-driven economics to stabilize its earnings. A wider customer base gives added stability to Canadian Western Bank stock’s quarterly dividend, which the bank customarily increases by $0.01 every two quarters. The bank may announce its next dividend raise on May 31, 2024, alongside its second-quarter earnings results. However, there hasn’t been an official statement to this fact yet.
The bank stock has raised dividends for 32 years, earning its place among Canada’s top dividend payers. It has been raising payouts after every two quarters by $0.01 since 2011. Since the pandemic, Canadian Western Bank stock’s dividend raises have been declared in May and December.
Shares trade 34% lower than their previous highs seen in 2021. Income-oriented investors will love CWB stock’s 5% dividend yield. The payout looks safe given a historical earnings payout rate of 40%. Management expects to deliver a low to mid-single-digit earnings growth for 2024, which may set the bank stock on a path to recovery, rewarding investors with capital gains.
