Top Canadian dividend stocks are a reliable source of recurring income. These are companies with solid fundamentals, a growing earnings base, and sustainable payout ratios. Moreover, these companies have resilient businesses to weather market volatility and consistently increase dividends, making them ideal for long-term income.
Against this backdrop, let’s look at three Canadian stocks that can help you earn reliable income over the next 10 years.
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Dividend stock #1
Investors seeking a reliable income stream could consider investing in leading Canadian utility stocks. These companies are known for their regulated business model and solid dividend payments. Among the best in this sector is Canadian Utilities (TSX: CU), which stands out due to its impressive record of dividend payments and growth.
Canadian Utilities’ services are regulated, enabling the company to deliver steady cash flow regardless of market conditions. This financial stability has helped the utility giant maintain and grow its dividend payments, even during economic downturns. Canadian Utilities increased its dividend for 52 consecutive years – the longest by any publicly traded Canadian firm. Its sustainable earnings from regulated assets and long-term contractual arrangements support this solid payout.
Canadian Utilities plans to invest about $4.3 to $4.7 billion over the next few years to expand its rate base by 3.5% to 4.3% by 2026. This rate base expansion will increase its earnings and support continued dividend growth.
Besides strengthening its core utilities businesses, Canadian Utilities is optimizing its energy infrastructure investments and exploring new growth platforms, which will likely boost its earnings and future dividend payments.
Dividend stock #2
The top Canadian banks could be a viable option for generating reliable dividend income for the next decade. Notably, Canada’s leading financial services companies are known for paying dividends for more than a century. Moreover, they consistently enhance their shareholder value by increasing their dividends.
Among the best Canadian bank stocks, income investors could keep Toronto-Dominion Bank (TSX: TD) on their radar. Toronto-Dominion Bank has been paying dividends for over 167 years. Moreover, TD has raised its dividend at an average annualized growth rate of 10% since 1998, the highest among top Canadian banks, making it a top pick for passive income.
Toronto-Dominion Bank’s dividend distributions are supported by its growing earnings base. The bank’s diversified revenue streams, solid asset base, and emphasis on operational efficiency drive its earnings and dividend payments. Further, its solid balance sheet and focus on accretive acquisitions accelerate its earnings growth and higher dividend payments.
While Toronto-Dominion Bank is well-positioned to grow its dividends over the next 10 years, its conservative payout ratio of 40–50% is sustainable in the long term.
Dividend stock #3
Investors can bet on top Canadian energy stocks for reliable income over the next 10 years. Among the best energy stocks, Enbridge (TSX: ENB) is a reliable stock for its commitment to enhancing its shareholder value through higher dividend payments.
Enbridge is an energy infrastructure company that transports oil and gas. Its vast liquid pipeline network connecting key demand and supply zones drives demand for its services and supports its financials. Enbridge has paid dividends for nearly seven decades thanks to its ability to consistently grow its earnings. Moreover, it increased its dividend at an average annual growth rate of 10% in the past 29 years.
Enbridge’s diversified revenue stream, long-term contracts, regulated cost-of-service tolling frameworks, and power purchase agreements will enable it to generate low-risk earnings that will drive its distributable cash flow (DCF) and dividend payments in the coming years.
Enbridge’s DCF per share is projected to increase by 5% in the long term, which implies that the energy company could continue to hike its dividend over the next decade.
