“If you don’t find a way to make money while you sleep, you will work until you die” – Warren Buffett’s quote highlighting the importance of passive income.
This quote sure has a way of hitting home. The question now becomes, how can we accumulate a growing passive income stream that we can rely on for many years to come? In this article, I’ll discuss three dividend stocks to move you in the right direction toward financial freedom.
Canadian Natural Resources: A long history of passive income
The first dividend stock that I’d like to highlight is Canadian Natural Resources Ltd. (TSX: CNQ). CNQ is a top-tier Canadian oil and gas company, with annual revenue of $36 billion and a market capitalization of $113 billion. Its assets consist of a diversified portfolio of high-quality natural gas, crude oil, and upgrading assets.
For passive income investors, Canadian Natural Resources stock is a valuable asset. Throughout its history, the company has paid out a meaningful amount in dividends. In fact, in the last 10 years, CNQ’s dividend has increased 377% to $2.20. This was made possible because of the company’s strong, consistent, and predictable cash flows.
Year-to-date, the company has returned $3.1 billion to shareholders, and this year is the 24th consecutive year of dividend increases. During this time, CNQ’s dividend has grown at an impressive compound annual growth rate (CAGR) of 21%.
Telus: Strong dividend growth
Telus Inc. (TSX: T) is another strong contender for investor passive income and dividend growth.
As a telecommunications giant that has a history of solid shareholder returns, Telus stock has been a long-term success story. In the five years ended 2023, Telus’ cash flow increased 15% to $4.5 billion. In addition to this, in Telus’ latest quarter, cash flow from operations came in at $1.1 billion and its free cash flow increased $123 million.
Now let’s look at Telus’ dividend, which is supported by the company’s growing cash flow. In the last 10 years, Telus’ annual dividend increased at a CAGR of 6.7%, to $1.45. In its latest quarter, the company increased its dividend by 7.1%.
Looking ahead, Telus is targeting 7 to 10 percent dividend growth, making Telus a top stock to buy for passive income.
Tourmaline: Ramping up shareholder returns
My last stock recommendation for long-term passive income is a little more unconventional. Tourmaline Oil Corp. (TSX: TOU), Canada’s largest natural gas producer, benefits from a strong asset base and strong long-term natural gas fundamentals.
Tourmaline has been generating significant cash flows as a result and this has meant rapidly growing dividends. In the last five years, Tourmaline’s regular dividend has grown 150% to the current $1.20 per share. That’s pretty impressive, but there’s more.
On top of this, Tourmaline has also been paying special dividends from time to time – in the last five years, the company has paid a total of $10.25 per share in special dividends.
All of this is supported by Tourmaline’s increasing role in the liquified natural gas (LNG) industry, which is expected to grow significantly over the next few years. Global demand for LNG is supported by the global push toward cleaner energy sources. Natural gas is comparatively cleaner than coal, inexpensive, and abundant in North America, making Tourmaline a clear beneficiary of this.
