The best dividend stocks provide a recurring income stream regardless of where the market moves. Thanks to the growing earnings base, shares of these companies add stability to your portfolio and deliver notable capital gains over time.
While the TSX has several dividend stocks, let’s explore companies that, in my opinion, are the best dividend stocks in Canada right now. These fundamentally strong Canadian stocks have proven histories of paying and increasing dividends in all market conditions.
Canadian Natural Resources
Canadian Natural Resources (TSX:CNQ) is one of the best dividend stocks for earning worry-free passive income. The Canadian oil and gas company’s diversified cash flows enable it to bolster shareholders’ returns. The energy giant has uninterruptedly raised its dividend for 24 years at a compound annual growth rate (CAGR) of 21%. Moreover, the stock currently offers a dividend yield of 4.3%.
Besides providing consistent income, the energy company has delivered exceptional capital gains driven by its solid financials. Shares of Canadian Natural Resources have grown at a CAGR of over 32% in the past five years, resulting in a capital gain of nearly 308%.
The company’s solid fundamentals, ability to grow production, high-value reserves, and long-life assets position it well to generate solid earnings and robust cash flow. Moreover, its low maintenance capital will support its profitability. Additionally, its focus on lowering operating costs will likely drive its earnings, dividends, and share price.
Fortis
Speaking of the best Canadian dividend stocks, Fortis (TSX:FTS) tops my mind. This Canadian utility giant stands out for raising its dividends for 50 consecutive years. Further, Fortis projects its dividends to grow by 4-6% annually through 2028. The durability of its distributions and visibility over future payouts make Fortis one of the best dividend stocks in Canada. Fortis stock offers a worry-free yield of about 4%.
The company’s defensive business model and growing rate base enable it to generate predictable cash flows that support higher dividend payments. Further, as Fortis generates nearly all of its earnings via regulated utility assets, its payouts are relatively safe and sustainable in the long term. Thanks to these attributes, the company is well-positioned to enhance shareholders’ value through higher dividend payments in the future.
The company expects its rate base to increase by approximately 6.3% annually through 2028. Its focus on growing its rate base by continued investments in regulated utility assets will likely drive its earnings, enabling Fortis to reward its shareholders.
TC Energy
Energy infrastructure company TC Energy (TSX:TRP) is among the best Canadian dividend stocks. This energy company has raised its dividends for 24 consecutive years. Moreover, its dividend increased at a CAGR of 7% during this period. Its stellar dividend payment history and visibility over future payouts make TC Energy a solid investment to earn stable dividend income.
TC Energy has one of the largest natural gas pipeline networks in North America. Further, it owns diversified and utility-like businesses that generate resilient cash flows. For example, TC Energy earns about 95% of its income through rate-regulated assets and long-term contracts. These frameworks add stability to its earnings and dividend payouts.
In the future, the energy infrastructure company will likely benefit from higher utilization of its assets. Moreover, its $31 billion secured capital program will likely expand its earnings base, driving its shares and dividends. TC Energy also focuses on reducing debts and divestiture of assets, which augur well for future growth.
The company expects to increase its dividend by 3-5% per annum and offers a compelling yield of 6.3%.
