Dividend investing is a widely used strategy due to several benefits. Dividends cushion or compensate for price drops during a declining market or elevated volatility. It also offers the opportunity to create passive income to augment active or regular income. More importantly, reinvesting dividends results in compounding returns over time and long-term investment growth.
Canadians are fortunate because they can choose from several dividend powerhouses on the TSX. ATCO (TSX: ACO.X), Exchange Income (TSX: EIF), and Dream Industrial (TSX: DIR.UN) are the top options if you want to enhance your investment portfolio.
Safe and reliable
ATCO is a safe choice not only for its 4.25% dividend yield but also for the utility stock’s 29-year dividend-growth streak. This Dividend Aristocrat trades at $45.78 per share, up 22.76% year to date. Through its subsidiaries, the $5.14 billion diversified global corporation operates electric utilities and natural gas production and provides distribution and construction services.
In the first half of 2024, adjusted earnings increased 8.9% year over year to $244 million. Besides the earnings growth, top subsidiary Canadian Utilities announced a $2 billion energy infrastructure project and partnered with Shell Canada to build the Atlas Carbon Storage Hub.
Another business, ATCO Structures, secured multiple contract awards in Australia and the United States worth millions of dollars. Given the lengthy corporate existence (77 years) and essential services the company provides, the quarterly should be safe for years.
Resilient business model
Exchange Income operates in the Aerospace & Aviation and Manufacturing industries. If you invest today, the share price is $48.83 (+12.37% year to date), while the dividend offer is 5.4%. This $2.32 billion acquisition-oriented dividend payer has never missed paying monthly cash dividends since January 14, 2014.
In the second quarter (Q2) 2024, revenue increased 5% to a record $661 million compared to Q2 2023, while net earnings dipped 10.8% to $33 million. However, free cash flow (FCF) rose 3.1% year over year to a record $101 million. Mike Pyle, chief executive officer (CEO) of EIC, said, “Our financial results demonstrate the strength of our diversified and resilient business model.”
Pyle also cited the contributions of the large long-term contracts obtained throughout 2023 for the strong quarterly performance. He sees significant growth opportunities in the Aerospace & Aviation segment, and inquiries from the customer base in the Manufacturing segment are on the rise.
Stable cash distributions
Dream Industrial is a solid option if you want exposure to the real estate sector. The $4 billion real estate investment trust (REIT) owns, manages and operates industrial properties in Canada, the U.S., and Europe. At $13.79 per share (+1.79%), you can partake in the generous 5.04% dividend offer. This REIT has consistently paid monthly dividends since April 15, 2015.
In Q2 2024, net rental income climbed 5.6% to $87.7 million versus Q2 2023, although net income fell 23.4% to $61.6 million owing to fair value adjustments to the investment properties. The latest tailwind is the over 500,000 square feet leased or conditionally leased within Dream Industrial’s various development projects. Management said the organic growth outlook remains intact.
Portfolio boosters
ATCO, Exchange Income, and Dream Industrial are reliable passive income providers. All three are excellent portfolio boosters, too.
