Often, when looking for stocks to buy, Canadian investors focus on some of the hottest names with significant growth potential. However, as important as it is to have high-quality growth stocks in your portfolio, steady and reliable dividend powerhouses are also some of the most important Canadian stocks you can own.
Owning defensive companies with reliable earnings that can consistently increase their dividends can help power your portfolio to significant gains, particularly over the long haul.
And while growth stocks can help lead to significant gains during economic expansions and market rallies, reliable dividend stocks are key to helping you earn a return when the economy is struggling and the stock market is flat or temporarily declining.
So, with that in mind, if you’re looking to shore up your portfolio today and boost the passive income your holdings generate, here are two Canadian dividend stock powerhouses that not only are constantly returning capital to investors but are also consistently increasing their dividend payments each year.
One of the best powerhouse Canadian dividend stocks on the TSX
Without a doubt, one of the very best dividend stocks that Canadian investors can buy is the massive large-cap utility stock Fortis (TSX:FTS).
Utility stocks are well-known as some of the safest and most reliable businesses you can invest in, as well as some of the top dividend growth stocks to buy and hold for the long haul. And while there are several high-quality utility stocks in Canada, Fortis is one of the best.
First off, in addition to its impressive and well-diversified utility operations, which consist of both electric and gas utilities spread across multiple jurisdictions, its track record alone highlights what an incredible long-term investment Fortis is.
For 50 straight years now, the Canadian stock has consistently increased its dividend every single year. And these aren’t little increases to its dividend just to keep the streak alive. In fact in the last five years, the dividend alone has grown by over 30%, or a compounded annual growth rate (CAGR) of 5.8%, easily outpacing inflation.
As I mentioned above, Fortis’ diversified portfolio of electric and gas utilities across multiple jurisdictions helps mitigate risk in an already ultra-low-risk industry. Not only are utilities essential and see very little fluctuation in demand even when the economy is struggling, but the industry is also regulated by governments, making Fortis’ future revenue and earnings potential highly predictable.
This makes Fortis’ dividend highly sustainable. Plus, with the continuous shift to cleaner energy and the demand for electricity constantly growing, Fortis continues to have years of growth potential ahead of it.
So when you combine its consistent dividend growth with the capital gains it provides investors, it’s no surprise that a low-volatility stock like Fortis has earned investors a CAGR of 9.5% over the last decade.
Furthermore, with interest rates still elevated, Fortis stock continues to trade off its highs, making now an excellent time to buy the powerhouse Canadian dividend stock.
A top financial services stock
In addition to Fortis, another high-quality powerhouse Canadian dividend stock is Manulife (TSX:MFC).
Manulife is one of Canada’s largest financial services companies with a market cap of roughly $64 billion. Plus, its combination of insurance and wealth management services spread across Canada, the U.S., and Asia gives it a tonne of diversification to help mitigate risk. Not to mention, it also exposes Manulife to more growth potential, particularly in Asian markets.
Although its dividend growth streak is much shorter than Fortis’ at just nine years, it’s also a Canadian dividend aristocrat. And with strong recurring revenue and consistent profitability the dividend is highly sustainable.
In fact, in 2023, Manulife’s dividend payout ratio was just 42% of its normalized earnings per share (EPS), allowing it to both return plenty of capital to investors while also retaining capital to invest in future growth.
Furthermore, analysts estimate its normalized EPS will grow by 7% this year and another 8% next year, which is significant growth for such a massive company.
So, if you’re looking for a high-quality powerhouse Canadian dividend stock to buy now and hold for years to come, there’s no question that Manulife is a top pick.
