Top Canadian dividend stocks are compelling investments to generate a steady stream of income. What makes them particularly attractive is their ability to maintain and even increase dividend payouts, regardless of market volatility or economic ups and downs. Against this background, let’s look at three Canadian dividend stocks with fundamentally solid businesses and a consistent payout history that can help you earn reliable income for years to come.
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Dividend stock #1
Fortis (TSX: FTS) is one of the most reliable Canadian dividend stocks for earning a steady stream of income. The utility company’s regulated business and growing rate base help generate predictable earnings, supporting its dividend payments.
Recently, Fortis raised its dividend by 4.2%, marking an impressive 51 consecutive years of dividend growth. In addition, the company unveiled a five-year, $26 billion capital plan, which is expected to grow its rate base from $38.8 billion in 2024 to $53 billion by 2029, translating into a compound annual growth rate (CAGR) of 6.5%. The rate base expansion will drive the company’s earnings and enable it to expand its dividend by 4–6% each year through 2029.
Besides its growing rate base, Fortis’ investments in energy transition projects and focus on strengthening its infrastructure and customer growth augur well for future payouts. In summary, Fortis’ resilient business model, proven dividend growth history, and visibility over future payments make it a worry-free income stock. Moreover, it offers a reliable yield of 4%.
Dividend stock #2
Like Fortis, Canadian energy infrastructure company TC Energy (TSX: TRP) is another dependable stock for a steady stream of income. TC Energy’s high-quality regulated and contracted assets consistently generate solid cash flows that support its payouts in all market conditions.
TC Energy has uninterruptedly increased its dividend at a CAGR of 7% over the past 24 years. Moreover, it aims to increase its dividend by 3–5% per year in the long term.
TC Energy announced the spin-off of its liquids business and is focusing on a highly regulated, low-risk portfolio. This will cushion its cash flows and support future payouts. Its extensive asset footprint, long-life assets, and $31 billion in secured projects backed by long-term contracts or commercial rate regulation augurs well for future earnings and cash flows. This, in turn, will support higher dividend payments. TC Energy stock also offers a compelling yield of 5.9%.
Dividend Stock #3
Bank of Montreal (TSX: BMO) is famous for its longest track record of dividend payments among the publicly traded Canadian companies. This makes this banking giant a reliable income investment for a steady stream of income.
Notably, Bank of Montreal has been consistently paying dividends for 195 years, which reflects its ability to consistently grow its earnings and reward its shareholders. Further, the financial services company has raised its dividend by a CAGR of 5% in the last 15 years.
Bank of Montreal’s diversified revenue base, solid deposit base, steady credit performance, strong balance sheet, and operating efficiency position it well to grow its earnings consistently in the coming years. The financial services giant’s earnings are projected to increase at a high single-digit rate in the medium term, enabling it to grow its earnings in line with its EPS growth rate.
Bank of Montreal offers a dividend yield of 4.8%. Moreover, its payout ratio is sustainable in the long term.
