Dividend stocks offer recurring income. However, only a few of them have the potential to provide consistent passive income for decades. These companies have solid fundamentals and sustainable payout ratios. Moreover, these firms can weather market fluctuations and prioritize rewarding shareholders through stable and growing dividends.
Against this backdrop, let’s look at three Canadian stocks that can help you earn consistent passive income over the next 10 years.
Canadian Natural Resources
Known for its resilient payouts and high dividend growth rate, Canadian Natural Resources (TSX:CNQ) stock is a must-have for earning consistent passive income. This energy company has rewarded its shareholders with higher dividends over the past 24 consecutive years. Moreover, its dividend grew at a compound annual growth rate (CAGR) of 21% during the same period.
Besides returning higher cash, Canadian Natural Resources stock has delivered above-average returns. The stock has grown at a CAGR of over 34% in the past five years and returned more than 343%, outperforming the broader markets.
The company’s strong earnings base, backed by low-decline reserves and high-quality assets, will likely drive its dividend payouts and share price. In addition, Canadian Natural Resources’ low maintenance capital requirements, disciplined capital-allocation strategy, and strong balance sheet position augur well for growth. In summary, Canadian Natural Resources is a dependable passive income stock and offers a decent yield of about 4.2% near the current levels.
Bank of Montreal
For decades of passive income, investors can rely on leading Canadian banks, famous for paying dividends for over a century. Bank of Montreal (TSX:BMO) is one of them, and it stands out for having the longest history of dividend payments.
This financial services giant has paid dividends for over 195 years and has increased its dividend at a CAGR of 5% in the last 15 years. This makes it a preferred choice for investors seeking reliable passive income. The bank also offers a lucrative yield of 5.2%.
Bank of Montreal’s growing earnings base supports its higher payouts. Its diversified revenue streams, solid balance sheet, stable credit performance, and operational efficiency will likely drive its future earnings, supporting higher dividend payments.
Over the medium term, the bank expects its earnings to grow at a CAGR of 7-10%. This means Bank of Montreal is well-positioned to increase its dividend by at least a mid-single-digit rate.
Fortis
Fortis (TSX:FTS) is a no-brainer for passive income investors. Thanks to its defensive business model and predictable and growing cash flow, this Canadian utility giant raised dividends for 50 consecutive years. This reflects the durability of its payouts and management’s commitment to enhance its shareholders’ value.
Fortis generates most of its earnings through its rate-regulated utility assets, which makes its payouts relatively safe and sustainable in the long term. Furthermore, the company consistently expands its rate base, which supports higher dividend payments.
Fortis’ future payouts look secure as the company focuses on growing its rate base through ongoing investments in regulated utility assets. The company expects its rate base to increase by approximately 6.3% annually through 2028, leading to 4-6% growth in its annual dividend during the same period. While Fortis’ dividend is projected to increase, it also offers a well-protected yield of about 4%.
