The Dividend Kings: Stocks Every Canadian Investor Should Own

Dividend Kings have the status for a reason. They’re stable, growing companies that will provide dividends to investors for decades.

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When it comes to investing, there are very few (if any) sure things out there. The market can change, stocks go up and down, and dividends can be cut. But that’s why Dividend Kings can be so darn attractive.

Dividend Kings have proven that no matter what the markets throw at it, these stocks will be able to keep on delivering dividends. So let’s get into why every Canadian investor should consider owning Dividend Kings. And the two Canadian stocks to pick up now.

Why Dividend Kings

First off, there’s the dividend. Dividend Kings are companies that have increased their dividends for at least 50 consecutive years. This consistency indicates a reliable income stream for investors, which is especially attractive for those seeking regular income, such as retirees. 

The ability to consistently increase dividends over such a long period typically suggests that the company has strong financial health, stable earnings, and effective management. These companies have proven their ability to generate profits even during economic downturns.

What’s more, investing in Dividend Kings can be seen as a lower-risk strategy. These companies often have established business models, diversified income streams, and strong competitive positions in their industries, which can make them more resilient to market volatility. They can provide a hedge against inflation, with long-term total return potential. With that, let’s go over the two Canadian Dividend Kings.

Fortis

Not exactly the new kid on the block, but Fortis (TSX:FTS) recently became the second Canadian company to achieve Dividend King status. Fortis has proven its ability to deliver consistent dividend increases for half a century. This not only underscores its financial stability but also its commitment to returning value to shareholders. 

For income-focused investors, Fortis provides a reliable and growing dividend, which can serve as a stable source of income. The company operates in the regulated utility sector, providing electric and gas services. Utilities are known for their stable cash flows and defensive nature, as they provide essential services with consistent demand regardless of economic cycles.

What’s more, about 99% of Fortis’s assets are regulated, which ensures stable and predictable revenue streams. Fortis has a strong balance sheet with prudent debt management, supporting its ability to invest in growth opportunities and maintain dividend payouts. So with a dividend yield at 4.3%, it’s looking like a strong option for long-term investors.

Canadian Utilities

Then there’s the original Dividend King, Canadian Utilities (TSX:CU). Canadian Utilities has increased its dividend for over 50 consecutive years, showcasing exceptional financial stability and a strong commitment to returning value to shareholders.

As with Fortis, Canadian Utilities operates in a sector known for its stable and predictable revenue streams. Utilities provide essential services, leading to consistent demand regardless of economic conditions. The company maintains a strong balance sheet, prudent debt levels, and healthy cash flow generation, which supports its ability to continue paying and increasing dividends.

Canadian Utilities has a substantial capital expenditure plan aimed at maintaining and expanding its infrastructure. These investments are expected to drive future growth in earnings and dividends. All together, you can achieve both growth and dividends from this Dividend King. Now trading with a yield at 5.8%.

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 Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends Fortis. The Motley Fool has a disclosure policy.

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