3 Dividend Aristocrats That Could Turbocharge Your Investments

The Canadian National Railway (TSX:CNR) is a Canadian dividend aristocrat with 27 consecutive dividend hikes.

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Are you looking for stocks that could turbocharge your investment portfolio? If so, dividend aristocrats are the pile you want to be looking at. Since their inception in 1990, the Aristocrats have outperformed the S&P 500, generally with lower levels of risk than most stocks, while paying consistent and growing dividends. These stocks include popular consumer brands, infrastructure companies, and utilities. Among the safest and most dependable stocks out there, they have stood the test of time. In this article, I will explore three dividend aristocrats that could add some much-needed alpha to your portfolio in 2024.

CN Railway

The Canadian National Railway (TSX:CNR) is a Canadian dividend aristocrat with 27 consecutive dividend increases under its belt. Its dividend increases have been made possible by steady growth in revenues, earnings, and cash flows. Over the last five years, the company has compounded its earnings at 7.2% and its free cash flow by 14.8% per year. A very good showing. The company also has good profitability metrics, including a 33% net margin, a 15% free cash flow margin, and a 27% return on equity.

How is CN Railway able to deliver this extravaganza of growth and profit? It all comes down to its competitive advantage. CN Railway is one of only two major railways in Canada. It does face some competition from trucking companies, but they are much more expensive for long-distance shipments. For massive bulk shipments, railroads are truly the “only game in town,” and CN Railway itself is one of only two Canadian railroads. It’s a recipe for high profits.

Although CN Railway’s dividend yield is only 2% today, it has grown its dividend at 11% per year over the last five years. If the future looks like the recent past, then CN Railway may have more dividend hikes ahead of it.

Fortis

Fortis Inc (TSX:FTS) is a Canadian dividend aristocrat – nay, dividend king – with 50 consecutive years of dividend hikes in the bag. It is one of only a tiny handful of Canadian companies with such a track record of dividend growth. It also has a pretty high yield today: about 4.4%.

How has Fortis achieved all of this dividend growth? It comes down to its expansion strategy. Unlike many utilities, Fortis hasn’t rested on its laurels over the years. It has consistently invested in its business, buying up utilities across North America and the Caribbean. It is currently working on a major series of capital expenditures that aim to increase the company’s rate base. On the whole, I expect Fortis’ dividend to continue being paid.

Coca-Cola

Coca-Cola (NYSE:KO) is a U.S. Dividend King with more than 61 consecutive dividend increases in the rearview mirror. It has a 3% yield today and has raised its dividend at 3.5% per year over the last five years. How has Coca-Cola achieved its (fairly) high yield and dividend growth? Chiefly through its brand and relationships. The Coca-Cola brand is widely recognized worldwide, allowing the Coca-Cola company to charge premium prices for its beverages. The company also has exclusive supplier deals to provide soft drinks to many restaurant chains and venues. These advantages all add up to a very dependable revenue stream.

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 Andrew Button has no position in any of the stocks mentioned. The Motley Fool recommends Canadian National Railway and Fortis. The Motley Fool has a disclosure policy.

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