Income Stocks: A Once-in-a-Decade Chance to Get Rich

These two income stocks are among the best on the TSX for those seeking consistent total returns over a long-term time horizon.

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During an economic downturn, investing in high-quality dividend stocks that provide the sort of passive income many investors are after is important. Indeed, a good chunk of total returns generated in the stock market come from dividends. Accordingly, having the right mix of income stocks and higher-growth names in a portfolio is important.

The two companies I’m going to highlight below provide a mix for long-term investors. Additionally, these companies also have shown a historical preference for raising their dividend distributions over time. That’s generally a solid investment foundation to build upon, making these prospective portfolio staples for so many investors.

Let’s dive in!

Fortis

Fortis (TSX:FTS) is a top Canadian utilities company that’s seen impressive long-term growth. Despite some volatility in recent quarters, this company’s steady stream of cash flows derived from its regulated utilities business provides the kind of earnings growth that has fueled a five-decade-long streak of dividend increases over time.

Created with Highcharts 11.4.3Fortis PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

With a current dividend yield of 4.2% and plenty of potential for future dividend hikes in the future, Fortis stock is a bond-like proxy I think investors ought to consider right now. In its first quarter, the company’s net earnings grew from US$437 million to US$459 million over the year-ago period, with adjusted earnings per share coming in at $0.93. Thus, the company will need to continue to see earnings growth moving forward to justify the 6% or so annual increases it has provided to investors over the long-haul.

With strong capital spending plans and a decent likelihood of rate increases over time, this is a company that remains among the best dividend stocks to consider for its diversified utilities exposure. For those looking at a long-term portfolio holding, Fortis remains a top income stock I think is worth considering.

Restaurant Brands

Restaurant Brands (TSX:QSR) is one of the world’s largest quick-service restaurant companies headquartered in Canada. The company brings in approximately $40 billion in system-wide sales annually and operates 31,000 restaurants in approximately 100 countries. In addition, the company owns and operates four of the world’s prominent and quick service restaurant brands: Tim Hortons, Popeyes Louisiana Kitchen, Firehouse Subs, and Burger King. 

Created with Highcharts 11.4.3Restaurant Brands International PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

Restaurant Brands reported impressive net income of US$328 million for the first quarter of 2024. The net cash provided by operating activities was US$148 million and free cash flow was US$122 million. Furthermore, the company reported an increase in its consolidated comparable sales by 4.6% and system-wide sales by 8.1% year-over-year. The operating income for the quarter was US$544 million, an increase from US$447 million year-over-year. 

Restaurant Brands is targeting comparable sales growth of over 3% and unit growth of more than 5% by the conclusion of 2028. The company plans to grow its system-wide sales by 8% and adjusted operating income by 8% in the next 5 years. Overall, for those looking for a defensive income stock paying above 3% that will benefit from potential trade-down effects in this inflationary environment, Restaurant Brands is certainly an enticing pick at current levels.

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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 Chris MacDonald has positions in Restaurant Brands International. The Motley Fool recommends Fortis and Restaurant Brands International. The Motley Fool has a disclosure policy.

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