Investing in dividend stocks is a magnificent strategy. Historically, these stocks have outperformed broader equity markets. Besides, their regular payouts make them less susceptible to market volatility, thus strengthening your portfolio. Against this backdrop, let’s look at three top Canadian dividend stocks you can buy in October.
Enbridge
Enbridge (TSX: ENB) has been paying dividends for 69 years and has increased its dividends uninterruptedly for 29 years. The midstream energy company, which transports oil and natural gas across North America, earns around 98% of its cash flows from regulated cost-of-service and long-term take-or-pay contracts. Besides, around 80% of its EBITDA (earnings before interest, tax, depreciation, and amortization) is inflation-indexed, shielding its financials against rising prices. Supported by these reliable cash flows, the company has hiked its dividends consistently.
Meanwhile, Enbridge continues to strengthen its midstream, utility, and renewable energy assets with a $24 billion secured capital program. In the first two quarters, the company made a $3 billion capital investment and expects to increase it to $6 billion by the end of this year. Besides, it is working on closing the acquisition of the third utility asset in the United States from Dominion Energy, which the company expects to complete this year. Further, its debt-to-EBITDA stands at 4.7, and the company hopes to lower it further. Given its regulated businesses, healthy growth prospects, solid financials, and high dividend yield, I believe Enbridge is an excellent addition to your account.
Bank of Nova Scotia
Bank of Nova Scotia (TSX: BNS) is another solid dividend stock to buy in October due to its consistent dividend payout and high yields. The bank has been paying dividends consistently since 1833. It has also raised its dividends at an annualized rate of 6% since 2013, while its forward dividend yield stands at a juicy 5.8%.
Last month, the Bank of Nova Scotia reported a solid third-quarter performance, with its topline and adjusted net income growing quarter-over-quarter. Besides, it has strengthened its balance sheet. Its common equity tier 1 ratio, which will determine the company’s ability to withstand financial distress, improved by 10 basis points to 13.3% compared to the previous quarter.
Moreover, BNS has increased its capital deployment in high-growth markets to deliver sustainable and profitable growth. Last month, it signed an agreement to acquire a 14.9% stake in KeyCrop. The company’s management hopes this transaction will drive its near-term profitability, grow its United States business, and expand its footprint across North America. Given its improving financial position and healthy growth prospects, I believe BNS is well-equipped to continue rewarding its shareholders with healthy dividends.
Fortis
My final pick would be Fortis (TSX: FTS), which operates 10 regulated electric and natural gas utilities across Canada, the United States, and the Caribbean. Given its regulated and low-risk utility businesses, the company enjoys healthy cash flows, allowing it to raise its dividends consistently. FTS stock has raised its dividends for 51 consecutive years and currently offers a forward dividend yield of 4%.
Further, Fortis plans to make a capital investment of around $25 billion from 2025 to 2029, which could grow its rate base at an annualized rate of 6.5% to $53.1 billion by the end of 2029. Besides, the company is focused on improving operating efficiencies, which could boost its profits. Amid softening inflation, the central banks have adopted monetary easing initiatives, which could lower the company’s interest expenses. Moreover, Fortis’s management expects to raise its dividends 4–6% annually through 2029.
