Passive Income: 3 Safe Dividend Stocks to Own for the Next 10 Years

These Canadian companies will likely sustain and potentially increase dividends over the next 10 years.

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Investing in dividend stocks is one of the top strategies for earning worry-free passive income. Thankfully, the TSX has several high-quality and fundamentally strong dividend-paying companies with a stellar track record of regular payouts. Moreover, these Canadian companies have a growing earnings base and robust cash flows that enable them to increase their dividends regardless of market conditions. These positives make them safe passive income stocks.

Against this backdrop, here are three Canadian stocks from sectors like energy, utilities, and banking, known for offering dependable dividends.

A top energy stock

Canadian energy companies are popular for offering solid dividends. Investors could consider Canadian Natural Resources (TSX:CNQ) stock from the energy sector. This oil and gas company is known for rapidly growing its dividend. For instance, CNQ increased its dividend at a compound annual growth rate (CAGR) of 21% in the last 24 years. Its resilient and growing payouts make Canadian Natural Resources a dependable income stock.

Besides offering consistent dividend income, this energy company has generated solid capital gains of over 253% in the last five years. Moreover, CNQ provides an attractive high yield of 4.4%.

The energy company’s payouts are backed by a diversified, long-life asset base and high-value reserves. Further, the low maintenance capital requirement, cost-cutting measures, and robust balance sheet support its earnings and overall growth. The company’s disciplined capital allocation strategy and ability to increase production will likely generate higher earnings and free cash flows, supporting its future dividend payments. 

A leading banking stock

It is a well-known fact that leading Canadian banks have been paying dividends for over a century. This makes them a lucrative investment option for income investors. Among the top banks on the TSX, Toronto-Dominion Bank (TSX:TD) is a reliable stock for earning worry-free passive income over the next decade.

This financial services giant has been paying dividends consistently for 167 years. It has also raised its dividend at an annualized growth of about 10% since 1998, marking it the highest growth rate among its peers. This reflects its ability to grow its earnings in all market conditions. Besides a solid dividend payment and growth history, Toronto-Dominion Bank has a low payout ratio of 40 to 50%, making its dividend distributions sustainable over the long term. Moreover, the bank offers a healthy yield of 5.4% at the current levels.

Toronto-Dominion Bank’s high-quality assets, diversified revenue streams, and focus on improving efficiency will likely drive its earnings and support higher dividend distributions. Further, the bank’s focus on its growing loan portfolio, solid deposit base, strong credit quality, and strategic acquisitions augur well for long-term growth. 

A high-quality utility stock

Utility companies are renowned for their resilient dividend payments. Investors seeking durable and safe dividend income could consider Canadian Utilities (TSX:CU) stock from the utility sector. The company boasts an unmatched dividend growth history of 52 consecutive years, the longest by any Canadian company. Further, it offers an attractive yield of 6.1%, near the current price levels.

Thanks to its defensive business model, growing rate base, and predictable cash flows, the company has enhanced its shareholders’ value through consistently higher dividend payments. Further, its regulated utility assets ensure that its payouts are well-protected.

Canadian Utilities is expanding its rate base by investing in regulated utility assets. Moreover, the company’s focus on investing in commercially secured energy infrastructure capital projects augurs well for growth.

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 Sneha Nahata has no position in any of the stocks mentioned. The Motley Fool recommends Canadian Natural Resources. The Motley Fool has a disclosure policy.

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