Beginning Investors: I Highly Recommend You Start With These 2 Dividend Powerhouses for Decades of Income

Here are two top Canadian dividend powerhouses new investors can hold for decades to expect consistent and stable passive income.

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New investors looking to build a robust portfolio should ideally focus on stocks that ensure both stability and growth. A reliable way to generate income from such a portfolio is through dividend stocks. Many Canadian companies that pay dividends have done so for decades, offering a dependable income stream, which makes them an excellent choice for those starting their investment journey.

Another big advantage of investing in dividend stocks is that they can provide a steady stream of income regardless of the market conditions, as most of them tend to have strong fundamentals and resilient business models.

Some of the best Canadian dividend stocks belong to the banking and energy sectors, which have proven to be stable and profitable over the years. In this article, I will highlight two such dividend powerhouses from these sectors that could serve as excellent additions to a beginner’s portfolio.

Scotiabank stock

Bank of Nova Scotia (TSX:BNS) or Scotiabank is the first among dividend powerhouses beginning investors can consider today. Scotiabank is Canada’s fourth-largest bank by market capitalization (around $78.5 billion). While the bank generates nearly 60% of its revenue from its home market, the remaining comes from its international operations. This gives BNS a diversified and resilient source of income in different economic cycles.

If you don’t know it already, Scotiabank has been regularly rewarding its investors with attractive dividends since 1833, making it one of the longest dividend-paying companies in the world. The bank has increased its dividend per share by roughly 28% in its last five fiscal years alone (ended in October 2023) and currently offers an annualized yield of 6.6%.

Although higher provisions for credit losses due to the ongoing macroeconomic challenges have affected its earnings growth of late, Scotiabank’s revenue has still gone up by 5.9% YoY (year over year) in the last 12 months (ended in April 2024). Its financial growth trends are expected to improve significantly in the coming quarters as the Bank of Canada recently started slashing interest rates, which should boost the demand for Scotiabank’s diversified services.

Despite these positive expectations, BNS stock has seen 21% value erosion in the last three years, making it look undervalued to buy on the dip now, especially to hold for the long term.

Enbridge stock

Enbridge (TSX:ENB) could be another great dividend powerhouse that beginning investors may want to consider in Canada right now. It’s one of Canada’s largest energy infrastructure companies, mainly involved in the transportation and distribution of crude oil and natural gas. With a market capitalization of approximately $104.3 billion, ENB plays a very important role in North America’s energy supply chain.

This energy stock currently trades at $49.08 per share and offers a solid 7.5% annualized dividend yield. Interestingly, Enbridge has been paying dividends for nearly seven decades and has an excellent track record of raising dividends for 29 consecutive years.

Even as macroeconomic challenges have taken a toll on Enbridge’s top line, its adjusted earnings in the last 12 months (ended in March 2024) grew positively by 1.4% YoY to $2.86 per share due partly to the company’s strategic focus on diversifying its revenue streams further by making new acquisitions. Moreover, ENB’s strong financial position and largely predictable cash flows give it plenty of room to continue investing in more growth projects and rewarding its shareholders with higher dividends.

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.

The Motley Fool recommends Bank Of Nova Scotia and Enbridge. The Motley Fool has a disclosure policy. Fool contributor Jitendra Parashar has no position in any of the stocks mentioned.

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