Dividend stocks are a solid investment for earning passive income. Investors can rely on fundamentally strong companies that consistently pay and increase dividends to start a growing passive-income stream.
Notably, the TSX has several companies that have paid and increased their dividends for decades. However, here I’ll focus on the top five Canadian stocks whose dividends will keep growing, regardless of market conditions. Let’s delve into stocks.
Fortis
Fortis (TSX: FTS) is an obvious choice for investors seeking worry-free passive that will grow with them. The Canadian utility giant has raised dividends for 50 consecutive years. Its rate-regulated business generates predictable and growing cash flows that support higher dividend payments. Moreover, Fortis generates nearly all of its earnings via regulated assets, implying its payouts are relatively safe and sustainable in the long term.
Fortis’s rate base is projected to increase at a compound annual growth rate (CAGR) of 6.3% through 2028. This will expand its earnings and drive dividends. The utility company forecasts dividend growth of 4-6% annually through 2028. Moreover, it offers a well-protected yield of 4.1%.
Enbridge
Investors could consider shares of the energy infrastructure company Enbridge (TSX: ENB) for growing dividend income. This energy company is famous for its resilient payouts and ability to increase dividends regardless of economic and commodity cycles. Enbridge’s dividend grew at a CAGR of 10% in the last 29 consecutive years. Further, it offers a high yield of over 7% near the current price levels.
Its diversified revenues, high asset utilization rate, power-purchase agreements, long-term contracts, and multi-billion-dollar capital projects augur well for earnings and distributable cash flow (DCF) growth. Its earnings per share (EPS) and DCF per share will likely increase at a mid-single-digit rate, implying Enbridge will keep growing its dividend at a low- to mid-single-digit rate in the coming years.
TC Energy
With 24 consecutive years of dividend growth, TC Energy (TSX: TRP) is another solid stock for earning recurring passive income that will grow with time. This energy infrastructure company owns and operates diversified, utility-like businesses and generates about 97% of its earnings through rate-regulated assets and long-term contracts, which adds stability to its payouts.
Solid demand for its services, high system utilization rate, divestiture of assets, and reduction of debt position it well to generate solid earnings in the coming years. Moreover, a $31 billion secured capital program through 2028 will drive its earnings and payouts. TC Energy expects its future dividend to increase by 3-5%. Further, it offers a high yield of over 6.6%.
Brookfield Renewable Partners
Brookfield Renewable Partners (TSX: BEP.UN) is a compelling stock in the renewable energy sector known for its impressive dividend growth history. Investors should note that Brookfield Renewable increased its dividend at a CAGR of 6% between 2012 and 2023. Further, the company expects to grow its dividend by 5-9% annually in the upcoming years. In addition, Brookfield offers a compelling yield of about 5.9%.
Its highly contracted portfolio will enable it to generate solid financials and offer higher dividend payments in the future. Further, its highly diversified assets base, growing power generation capacity, and solid developmental pipeline will enable it to capitalize on clean energy demand and return higher cash to its shareholders.
Telus
Telus (TSX: T) stock should be on your radar for higher dividend income. The telecom company has consistently raised its dividend. For instance, it has increased its dividends 26 times since May 2011 under its multi-year dividend-growth program. Further, it expects to grow its dividend by 7-10% through 2025. Further, it offers an attractive yield of over 7%.
The company’s growing customer base and focus on improving operating costs will likely boost its earnings and cash flows, supporting higher dividend payments. Further, the expansion of its wireless and PureFibre broadband networks and 5G services will support its growth and future payouts.
