Top 3 TSX Dividend Stocks Increasing Payouts in May 2024

Following a strong bout of inflation, dividend bumps could cushion income investors’ purchasing power. Canadian Western Bank (TSX:CWB) stock, CT REIT (TSX:CRT.UN), and another top dividend stock are raising payouts this month.

| More on:
grow money, wealth build

Image source: Getty Images

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.

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) Chart

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.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Brian Paradza has no position in any of the stocks mentioned. The Motley Fool recommends Canadian Western Bank and TMX Group. The Motley Fool has a disclosure policy.

More on Dividend Stocks

Hour glass and calendar concept for time slipping away for important appointment date, schedule and deadline
Dividend Stocks

This 8% Dividend Stock Pays Cash Every Month

Earn monthly cash of $154 with this 8% dividend stock.

Read more »

oil tank at night
Dividend Stocks

Think Oil Is Going Higher? 3 Dividend Stocks to Buy Now

Looking for steady dividend growth? These three Canadian oil stocks could provide substantial dividend income in the coming years.

Read more »

Profit dial turned up to maximum
Dividend Stocks

This 7% Dividend Stock on the TSX is Worth Watching

With this superb TSX stock now trading at the bottom of its 52-week range, it's certainly a dividend stock you'll…

Read more »

edit Businessman using calculator next to laptop
Dividend Stocks

2 TSX Dividend Stocks to Buy While They Still Offer Great Yields

These top dividend-growth stocks now offer 7% dividend yields.

Read more »

Dots over the earth connecting the world
Dividend Stocks

1 Magnificent Dividend Stock Down 23% to Buy Right Now Near a Once-in-a-Decade Valuation

Patient investors could be happy with this dividend stock a few years down the road.

Read more »

Human Hand Placing A Coin On Increasing Coin Stacks In Front Of House
Dividend Stocks

Best Stocks to Buy in May 2024: TSX Real Estate Sector

Besides yielding stable monthly passive income, these top TSX real estate stocks could help you earn high returns on your…

Read more »

exchange-traded funds
Dividend Stocks

These 2 Dividend ETFs Are a Retiree’s Best Friend

Retirees looking for steady income will love these two Canadian dividend ETFs

Read more »

Bad apple with good apples
Dividend Stocks

Safe and Sound Stocks for Canadians: My Top 5 Choices

Want some of the best stocks for Canadians right now? Here's my top 5 list of stocks to buy today…

Read more »