Investors seeking growing dividend income could consider shares of fundamentally strong companies that focus on consistently enhancing their shareholders’ returns. Thankfully, the TSX has many such high-quality dividend stocks whose dividends keep growing regardless of market conditions.
Against this backdrop, let’s examine five Canadian stocks renowned for their commitment to increasing shareholders’ returns through dividend hikes.
Enbridge
Energy infrastructure giant Enbridge (TSX: ENB) is a top stock whose dividend keeps growing. The company has uninterruptedly increased its dividend for 29 years. Moreover, its dividend has sported a compound annual growth rate (CAGR) of an impressive 10% during the same period. What stands out is management’s focus on consistently increasing its dividend with each passing year. Enbridge is well-positioned to increase its dividend by a mid-single-digit rate in the long term. Meanwhile, it offers a lucrative yield of 7.5%.
The company’s diversified revenue streams, contractual arrangements, and high asset utilization rate position it well to consistently generate solid earnings and strong distributable cash flows (DCF) per share, supporting higher payouts. Further, its multi-billion secured projects and investments in conventional and renewable energy assets enable it to deliver solid DCF, driving higher distributions. With a targeted payout ratio of 60 to 70% of DCF, Enbridge’s dividend is well covered and sustainable in the long term.
Canadian Natural Resources
Alongside Enbridge, investors could consider adding Canadian Natural Resources (TSX: CNQ) stock in the energy space for growing dividend income. This oil and natural gas company has been rapidly growing its dividends. For instance, Canadian Natural Resources has consistently increased its dividend at a CAGR of 21% for the last 24 years.
The energy producer’s diversified assets, high-value reserves, disciplined capital allocation strategy, and ability to increase production enable it to generate higher earnings and free cash flows. This allows the company to return cash to its shareholders through higher payments, making it a lucrative income stock. Meanwhile, it offers a yield of 4.1%, near the current market price.
Fortis
Electric utility giant Fortis (TSX: FTS) is a must-have stock for earning dividends that will grow with you. It has raised its dividend for five decades, making it a compelling investment option. Fortis operates a low-risk, regulated electric utility business that generates predictable cash flows in all market conditions, enabling it to increase its dividends consistently. Moreover, its dividend payouts are well covered, thanks to its defensive business model and growing rate base.
The company is focused on expanding its rate base, which will likely drive earnings and future payouts at a decent pace. Fortis expects its rate base to grow at a CAGR of 6.3% through 2028 and projects its annual dividend to increase by 4 to 6% during the same period. FTS stock offers a yield of about 4.5% at current levels.
goeasy
goeasy (TSX: GSY) has increased its dividends at a solid pace, reflecting its ability to grow its earnings rapidly. This subprime lender increased its dividend for 10 consecutive years, with the latest dividend growth of 21.9% in February 2024.
Its ability to grow its consumer loans portfolio, large addressable market, diversified funding streams, and geographical expansion will likely boost goeasy’s earnings and drive higher payouts. Also, steady credit performance and improving operating efficiency will likely support its bottom-line growth and dividend payments.
Cogeco Communications
Cogeco Communications (TSX: CCA) could be a valuable addition for income investors. This telecom and internet services provider has increased its dividend by over 10% in the past 10 years and offers a high yield of about 6.5%.
Cogeco is poised to benefit from expanding its fiber-to-the-home offerings and acquiring complementary broadband businesses. Additionally, its resilient business model and the introduction and development of mobile services in the U.S. and Canada will likely broaden its market reach, bolster its revenues, and drive earnings and dividends.
