Investing in the best dividend stocks can help Canadian investors generate a reliable and growing passive income for years. These dividend-paying companies have well-established businesses, solid fundamentals, and a growing earnings base, which enables them to consistently reward their shareholders with higher distributions.
While several companies trading on the TSX offer durable dividends, I’ll focus on the three best Canadian stocks with a solid history of uninterruptedly paying and growing dividends despite uncertain market conditions. Moreover, these companies will likely increase their payouts in the upcoming years.
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Telus
Telus (TSX: T) is a reliable stock offering durable payouts and a high yield. The telecom giant has paid about $21 billion in dividends since 2004. The company has consistently raised its dividend under a multi-year dividend growth program. Moreover, it aims to increase its annual dividend by 7-10% through 2025. While Telus is likely to offer higher dividends, its payout ratio of 60%-75% of free cash flow is sustainable in the long run.
Canada’s leading wireless service provider consistently delivers profitable growth, which covers its dividend payouts. Its leading network infrastructure, growing customer base, and focus on improving efficiency are likely to consistently support its earnings and enable it to reward its shareholders with higher dividend payments. Further, Telus offers an attractive yield of 6.9% near the current market price.
Telus’ investments in expanding its PureFibre Network and 5G infrastructure, focus on leveraging artificial intelligence (AI), and entry into high-growth segments such as cybersecurity and digital transformation will likely accelerate its growth. In addition, its focus on growing average revenue per user, low churn rate, and cost reductions will likely support its earnings and drive dividends.
Bank of Montreal
Leading banking stocks in Canada are famous for paying dividends for over a century. Among the top ones, Bank of Montreal (TSX: BMO) is a compelling stock that has consistently paid dividends for 195 years. What stands out is that the bank has paid dividends for the longest period among any Canadian corporation. Moreover, Bank of Montreal’s dividend has grown by about 5% annually over the last 15 years.
Over the medium term, Bank of Montreal’s earnings are forecasted to grow at a high single-digit rate. This should help drive its dividends.
Further, this financial services giant is poised to benefit from its diversified revenue sources, a growing deposit base, and focus on operational efficiency. Moreover, Bank of Montreal’s solid balance sheet and stable credit performance bodes well for growth. It currently offers a yield of about 4.8%.
TC Energy
Like banking stocks, Canadian energy companies are famous for consistently paying higher dividends. TC Energy (TSX: TRP) is a reliable stock with a solid dividend growth history and visibility over future payouts in the energy sector.
This energy infrastructure company has raised its dividend at a compound annual growth rate (CAGR) of 7% since 2000 and plans to increase its future dividend by 3–5% annually. Currently, TC Energy stock offers an attractive yield of 5.9% based on its closing price of $65.53 on October 21.
TC Energy’s high-quality asset base supports its cash flows and its dividends. Notably, its rate-regulated assets or long-term contracts generate most of its comparable earnings, which implies that its payouts are well-covered. Further, TC Energy will likely benefit from increasing demand and higher utilization of its assets. Moreover, the spin-off of its liquids business, its secured capital program, and debt reduction augur well for future earnings and dividend growth.
