Dividend stocks with relatively safe payouts can help you earn worry-free passive income for decades. Notably, the TSX has several fundamentally strong companies renowned for consistently maintaining and growing their dividends through various market conditions. These dividend-paying stocks are backed by resilient business models, growing earnings bases, and cash flows, making them a reliable source of passive income.
With this background, let’s look at three safe Canadian stocks that everyone should own. Importantly, these companies are well-positioned to sustain and potentially increase their dividends in the coming years.
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Enbridge
Enbridge (TSX:ENB) stands out as a top Canadian stock offering a relatively safe dividend. Renowned for its commitment to enhancing shareholder value, this oil and gas transporter has consistently paid dividends for over 69 years. Impressively, Enbridge has increased its dividend for 29 consecutive years, boasting a compound annual growth rate (CAGR) of 10%.
Enbridge’s resilient business model enables it to generate solid earnings and distributable cash flows (DCF), supporting higher dividend payouts. The energy giant’s diversified revenue streams, long-term contracts, power-purchase agreements, and high asset utilization rates are key drivers of its earnings, cash flows, and dividend payouts.
Enbridge remains committed to returning higher cash to its shareholders. It is well-positioned to grow its earnings per share (EPS) and DCF per share at a CAGR of about 5% in the long term. Thanks to its growing earnings, its dividend could grow at a low-to-mid single-digit rate in the coming years. Further, Enbridge has a sustainable target payout ratio of 60 to 70% of DCF. Moreover, the energy company offers a compelling yield of 7.3%, based on the closing price of $50.17 on July 19.
Canadian Utilities
Canadian Utilities (TSX:CU) is another safe stock investors could consider for durable dividend income. This utility company boasts a dividend growth history of 52 consecutive years, the most by any publicly traded Canadian company.
Canadian Utilities’ defensive business model and predictable cash flows position it well to pay and increase its dividends in all market conditions. Further, its growing rate base drives its earnings and cash flows and supports its payouts. Besides relatively safe dividend payments, Canadian Utilities stock offers a high yield of 5.9%.
Looking ahead, Canadian Utilities remains focused on expanding its rate base by investing in regulated utility assets. These investments will drive its earnings base and ensure that its payouts are well-protected. Moreover, Canadian Utilities’ focus on commercially secured energy infrastructure capital projects augurs well for growth and will likely support future payouts.
Toronto-Dominion Bank
Toronto-Dominion Bank (TSX:TD) is one of the leading Canadian banks worth considering to earn safe dividend income. What stands out is that the bank has consistently paid dividends for about 167 years. Besides regular payments, this financial services giant has raised its dividend at a CAGR of about 10% since 1998, making it a reliable stock for income-seeking investors.
In addition, Toronto-Dominion Bank has a low payout ratio of 40 to 50%, implying its dividend distributions are sustainable over the long term. Moreover, the bank offers a healthy yield of 5.1% at the current levels.
Toronto-Dominion Bank’s high-quality assets and diversified revenue streams drive its earnings and higher dividend distributions. In addition, the bank’s focus on its growing loan portfolio, solid deposit base, and strong credit quality are positives. Also, the bank’s strategic acquisitions and focus on improving efficiency augur well for long-term growth and dividend payments.
