While stocks with high dividend yields tend to grab attention, it’s the dividend growth stocks that can make a real difference in your long-term portfolio. Many Canadian companies are focused on delivering not just regular dividends but increasing them year after year. Adding such fundamentally strong stocks to your portfolio can provide a steady income stream that grows over time, which is key for investors looking to build wealth in the years to come.
In this article, I’ll highlight two top dividend growth stocks in Canada that are worth considering right now.
TC Energy stock
TC Energy (TSX:TRP) is the first dividend growth stock you may want to consider buying. After spinning off its liquids pipelines business as a separate publicly listed company earlier this year, TC Energy is now highly focused on its natural gas infrastructure and power solutions segments. It currently has a market cap of $66.9 billion, and the stock trades around $64.43 per share with roughly 23% year-to-date gains. Even after rallying in 2024, TRP stock offers an impressive 5.9% annualized dividend yield.
The natural gas pipeline firm’s impressive performance in recent years clearly reflects its role as a top dividend growth stock. For the first half of 2024, TC Energy posted a massive 35% YoY (year-over-year) growth in segmented earnings, driven by its robust operations and ability to meet North America’s growing energy transportation demand.
One of the key drivers of TC Energy’s recent success is its Southeast Gateway pipeline project in Mexico, which is nearly complete. With 98% of the offshore pipeline already installed, the project is on track to be in service by mid-2025. This infrastructure will play an important role in supporting the increasing demand for natural gas across North America, mainly in the U.S. and Mexico. Encouraged by these strong fundamentals, TC Energy expects to maintain an annual dividend growth rate of 3 to 5% in the future, making it a really attractive dividend growth stock to buy now.
TD Bank stock
Toronto-Dominion Bank (TSX:TD) is another top dividend growth stock to buy now, in my opinion. After sliding 10% year to date, TD stock currently trades around $77.10 per share with a market cap of $134.8 billion. It has a 5.3% annualized dividend yield at this market price.
In the third quarter (ended in July) of its fiscal year 2024, TD Bank reported a net loss of $181 million, largely due to a significant one-time provision of $3.6 billion for the U.S. anti-money laundering (AML) investigations. Nevertheless, the bank managed to post a 3% YoY increase in its adjusted earnings to $2.05 per share. Moreover, one of TD Bank’s strongest segments, Canadian personal and commercial banking, delivered record net income and revenue last quarter, reflecting the bank’s ability to continue performing well even amid macroeconomic challenges.
Earlier this month, TD Bank managed to settle the AML investigations with U.S. regulators, with most of the financial impact already accounted for in previous provisions. This resolution, which included a US$3.09 billion payment, closes a difficult chapter for the bank, allowing it to refocus on its core operations and continue focusing on growth opportunities.
