Dividend stocks offer recurring passive income and decent capital gains over time. Thankfully, the TSX has several magnificent dividend-paying companies with consistent payouts. Among them, a select few stand out for their ability to increase dividends at an impressive rate, making them ideal candidates for earning passive income that will grow with you.
In this article, I’ll highlight two exceptional Canadian stocks that are well-positioned to significantly boost their dividends over the next 10 years. These Canadian firms have resilient earnings bases and healthy cash flows, enabling them to deliver above-average dividend growth, even in challenging market environments. Investing in these companies now could help you earn a growing passive income over the next decade.
Canadian Natural Resources
Investors looking for stocks offering consistent and high dividend growth over the next decade could consider Canadian Natural Resources (TSX:CNQ). This oil and gas producer is among a few Canadian companies with exceptional dividend growth.
Canadian Natural Resources boasts an impressive record of hiking its dividend for 24 consecutive years. The company’s dividend grew at a remarkable compound annual growth rate (CAGR) of 21% during this period. This high dividend-growth rate reflects the company’s robust financial condition and commitment to returning value to shareholders.
In 2023 alone, Canadian Natural Resources announced two separate hikes to its dividend, leading to a total increase of 18%. Further, in February 2024, the energy giant boosted its dividend by an additional 5%.
The company’s long-life assets and high-value reserves, coupled with a strong balance sheet, ensure it can generate solid earnings even in challenging market conditions. Additionally, Canadian Natural Resources’s focus on cost reduction and low maintenance capital requirements support its ability to continue rewarding shareholders with higher dividend payments.
Investors who can hold onto Canadian Natural Resources stock for the next 10 years can earn a growing dividend income. Canadian Natural Resources stock currently offers a decent yield of 4.6%.
Telus
Telus (TSX:T), like Canadian Natural Resources, could be another lucrative stock that rewards its shareholders with high dividend growth over the next decade. This Canadian telecom giant has a proven track record of consistently increasing its dividends, thanks to its ability to expand its earnings base and multi-year dividend-growth program.
Since May 2011, Telus has impressively raised its dividend 26 times. Moreover, since 2004, the company has distributed approximately $21 billion in dividends, showcasing its dedication to rewarding shareholders. Currently, Telus offers an attractive dividend yield of around 6.9%, making it a compelling choice for income-focused investors.
Looking ahead, Telus aims to continue this upward trajectory, targeting an annual dividend-growth rate of 7-10% through 2025. This growth is likely to be fueled by the company’s ongoing expansion of its wireless and PureFibre broadband networks and 5G services. As Telus strengthens its infrastructure and broadens its customer base, it is well-positioned to generate solid earnings, which should, in turn, support further dividend increases.
The bottom line
Canadian Natural Resources and Telus are two solid dividend stocks on the TSX, offering investors higher dividend growth. Their strong financials and commitment to returning higher capital to shareholders make them compelling choices for anyone looking to build a growing income stream over the next decade.
