Investing in dividend stocks can generate recurring passive income. Thankfully, several Canadian companies with resilient payouts have rewarded their shareholders with higher dividends, making them top investments to earn safe income over the next 10 years.
However, investors should note that these Canadian stocks are not completely safe or risk-free but are relatively less volatile and have reliable payouts. Moreover, these companies also have solid business models, robust cash flows, and a growing earnings base, which supports their payouts in all market conditions.
Against this background, let’s look at three safe dividend stocks to own for the next 10 years.
A reliable energy stock
Speaking of safe dividend stocks, Canadian Natural Resources (TSX: CNQ) could be a reliable bet. This Canadian energy company is famous for increasing its dividend remarkably fast. It has rewarded its shareholders with higher cash over the past 24 years. What stands out is that this oil and gas producer has raised its dividend at a compound annual growth rate (CAGR) of 21%.
In addition to growing dividends, Canadian Natural Resources stock has delivered substantial capital gains and outperformed the broader markets. CNQ stock has jumped about 289% in the past five years, offering an average annualized return of over 31%. Further, it provides a decent yield of 4.5% near the current levels.
The resiliency of the company’s payouts stems from its long-life asset base and high-value reserves, which drive its earnings and cash flows. In addition, its low maintenance capital requirements, disciplined capital-allocation strategy, and strong balance sheet position it well to capitalize on growth opportunities and enhance shareholder value through higher payouts.
A high-quality utility stock
Canada’s top utility companies are known for their durable dividend payments, making them safe income stocks. One such solid dividend stock in the utility sector is Canadian Utilities (TSX: CU), which stands out for its unmatched dividend payment history. Notably, Canadian Utilities has the longest track record of growing its annual dividends among all the Canadian companies.
Canadian Utilities boasts an uninterrupted dividend-growth history of 52 years. Its payouts are supported by its defensive business model, growing rate base, robust earnings, and predictable cash flows. Moreover, the company generates most of its earnings from regulated utility assets, implying its payouts are well-covered. Besides consistently growing its dividends, it offers an attractive yield of 5.4%, near the current price levels.
Canadian Utilities is well-positioned to enhance its shareholders’ value through higher dividend payments as it continues to invest in regulated utility assets. This will likely expand its rate base and drive future earnings. Moreover, the company’s focus on optimizing its energy infrastructure capital projects will likely support its profits and dividends.
A leading banking stock
Leading Canadian banks are famous for paying dividends for over a century, making them safe investments to earn dividends. With that in mind, income investors can rely on Toronto-Dominion Bank (TSX: TD) to earn worry-free passive income. TD has consistently paid dividends for about 167 years. Moreover, the bank offers a healthy yield of 5.2% at the current levels.
What makes it attractive is that this financial services giant has raised its dividend at a CAGR of about 10% since 1998, which is higher than its peers. In addition, it has a low payout ratio of 40 to 50%, implying its dividend distributions are sustainable over the long term.
Toronto-Dominion Bank’s high-quality assets and diversified revenue streams drive earnings and higher dividend distributions. The bank’s focus on its growing loan portfolio, solid deposit base, and strong credit quality are also positives. Further, its strategic acquisitions and focus on improving efficiency augur well for long-term growth and dividend payments.
