Companies that consistently raise their payouts are the smartest dividend stocks to buy now. These stocks not only provide reliable income, but they also add stability to your portfolio and can boost your returns over time.
For example, companies that have a track record of raising dividends year after year are usually well-established, with strong earnings growth and the resilience to handle economic challenges. Thus, more than just providing a steady income stream, a growing dividend from these Canadian stocks allows you to reinvest regularly, helping your returns grow significantly in the long run.
So, if you plan to invest $500 in the smartest dividend stocks, here are my top picks.
Canadian Utilities stock
Investors seeking the smartest dividend stocks could consider Canadian utility companies. These companies are known for their defensive business model, regulated earnings base, and predictable cash flows, which enable them to pay and increase their dividends consistently. Within the utility sector, Canadian Utilities (TSX:CU) could be a solid addition due to its stellar track record of dividend growth.
The company has increased its dividend every year for the past 52 years – the longest by any publicly traded Canadian company. Canadian Utilities’ ability to increase dividends is closely tied to its earnings growth, driven by regulated and long-term contracted assets. This means that as the company’s earnings rise, so does its ability to reward shareholders with higher dividends.
The company’s global rate base – currently valued at $15.4 billion – has grown steadily over the years, supported by continued investments in its utility operations. Canadian Utilities plans to invest between $4.6 and $5 billion from 2024 to 2026 in its regulated utility businesses. These investments are expected to drive significant earnings and cash flow growth, supporting future dividend increases.
In addition, Canadian Utilities is optimizing its energy infrastructure assets and seeking new growth platforms. By diversifying and expanding its earnings base, the company aims to accelerate future earnings growth, which will support its payouts.
TC Energy stock
TC Energy (TSX:TRP) is one of the smartest dividend stocks to buy now. This energy infrastructure company has raised its dividend at a compound annual growth rate (CAGR) of 7% since 2000. Furthermore, it plans to increase its future dividend by 3–5% every year. Besides its solid dividend growth history and visibility over future payouts, TC Energy stock offers an attractive yield of 6% based on its closing price of $64.54 on October 15.
TC Energy’s dividends are supported by its high-quality asset base. The energy company generates approximately 95% of comparable earnings from rate-regulated assets or long-term contracts, which implies that its payouts are well-covered.
Looking ahead, TC Energy will likely benefit from the high demand and utilization of its assets. Further, the spin-off of the liquids business, $31 billion secured capital program through 2028, and reduction of debt augur well for future earnings and dividend growth.
AltaGas
AltaGas (TSX:ALA) operates an energy infrastructure and utility business. With a well-balanced portfolio, the company benefits from both high-growth opportunities in its midstream segment and steady, regulated returns from its utility business. This diversification provides a resilient platform for sustainable growth and dividend payments.
AltaGas has high-quality, long-life assets backed by strong fundamentals and long-term commercial contracts. These contracts ensure steady cash flow and earnings, which support its regular dividend payouts and provide stability amid market volatility.
The company’s focus on increasing take-or-pay contracts and tolling in its midstream business further reduces risk, providing a reliable revenue stream. This strategic move, along with efforts to strengthen its balance sheet, reduce debt, and optimize assets, positions AltaGas for continued growth.
The company expects to grow its dividends by 5–7% annually through 2028, supported by a 50–60% payout ratio. Overall, AltaGas’ growing earnings base and visibility over future payouts make it a dependable option for income investors.
