Canadian equity markets have been rising over the last few days amid expectations of an interest rate cut by the United States Federal Reserve and falling inflation. However, concerns over a global economic slowdown and geopolitical tensions persist. Given the uncertain outlook, investors could look to strengthen their portfolios and earn a stable passive income through the following four reliable dividend stocks.
Fortis
Fortis (TSX:FTS) is a Canadian utility company that serves the electric and natural gas needs of 3.5 million customers in Canada, the United States, and the Caribbean. With 99% regulated assets, the company offers more visibility into its cash flows, allowing it to raise its dividends consistently. The company has raised its dividends for 50 previous years, while its forward yield stands at 3.83%.
Meanwhile, the utility company is expanding its rate base through a $25 billion five-year plan from 2024-2028. These investments could boost its rate base at an annualized rate of 6.3%. The company expects to meet around 66% of these investments from the cash generated from its operations and equity offerings. So, these investments would not substantially raise its debt levels. Amid these growth initiatives, Fortis’s management is confident of increasing its dividends by 4-6% annually in the near term, thus making Fortis an excellent buy.
Canadian Utilities
Canadian Utilities (TSX:CU) also operates a low-risk, rate-regulated electric and natural gas transmission and distribution business. The company has raised its dividend for 52 years, the longest track record of increasing dividends by any Canadian public company. Its low-risk, regulated asset base delivers stable and predictable cash flows, irrespective of the broader market conditions, thus allowing it to raise its dividends consistently. Meanwhile, it currently offers a forward dividend yield of 5.03%.
Moreover, the company hopes to grow its asset base at an annualized rate of 3.5-4.3% through 2026 with a capital investment of $4.3-$4.7 billion. It also has a developmental pipeline of renewable energy projects with a total power production capacity of 1.3 gigawatts. Along with these growth initiatives, the falling interest rates could boost its earnings, thus making its future dividends safer.
Enbridge
Enbridge (TSX:ENB) operates a pipeline network that transports oil and natural gas across North America. It is also growing its presence in renewable energy and utility businesses. Its long-term take-or-pay contracts and inflation-indexed EBITDA (earnings before interest, tax, depreciation, and amortization) deliver stable cash flows, thus allowing the company to reward its shareholders with healthy dividends.
Enbridge has been paying dividends for 69 years. It has raised its dividend for 29 previous years at an annualized rate of 10% while currently offering a forward dividend yield of 6.59%. Meanwhile, the company is expanding its asset base with a $24 billion secured capital program and strategic acquisitions, which could boost its financials in the coming years. Its financial position also looks healthy, with its debt-to-EBITDA multiple at 4.7. Considering all these factors, I believe Enbridge would be an excellent dividend stock to have in your portfolios.
Canadian Natural Resources
Canadian Natural Resources (TSX:CNQ) is an oil and natural gas producer operating long-life, low-decline assets. Given its diverse and balanced asset base, effective and efficient operations, solid cost structure, and low maintenance capital requirement, the company enjoys a low WTI (West Texas Intermediate) break-even price and solid cash flows. Supported by these healthy cash flows, the company has raised its dividend at an annual rate of 21% for 24 years. Meanwhile, its forward yield stands at 4.70%.
Further, CNQ has planned to invest around $5.4 billion this year, strengthening its production capabilities. Also, with the company’s debt falling below its guidance of $10 billion, it aims to return 100% of its free cash flows to its shareholders. Considering all these factors, I believe CNQ is well-equipped to continue its dividend growth, thus making it an ideal buy for income-seeking investors.
