Top dividend stocks can help investors earn recurring passive income for decades. Moreover, their strong fundamentals, growing earnings base, and focus on rewarding shareholders enable these companies to increase their distributions consistently over time. So, for investors seeking worry-free income, here are my top three dividend stocks to buy now.
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Dividend stock #1
TC Energy (TSX: TRP) is an attractive dividend stock for its solid dividend payment history, higher future payouts, and compelling yield. For instance, this energy infrastructure company’s dividend grew at a CAGR of 7% for 24 consecutive years. Further, TC Energy expects to increase its dividend by 3-5% every year over the long term. Besides higher dividends, it offers a high yield of about 5.9%.
TC Energy’s regulated and contracted assets witness high utilization and generate predictable cash flows that support higher distributions.
Looking ahead, TC Energy’s focus on optimizing its portfolio and spinning off the Liquids business will enable it to generate steady growth and maximize shareholders’ value. Moreover, the company’s long-life infrastructure assets and $31 billion secured projects will generate significant earnings in the coming years and support its higher payouts.
Dividend stock #2
Speaking of top dividend stocks, Fortis (TSX: FTS) is a no-brainer. This Canadian electric utility company operates a defensive business model, with its regulated assets generating predictable and growing cash flows. As a result of its low-risk and expanding earnings base, Fortis has established a reputation for consistently rewarding its shareholders with higher dividend payments and providing a worry-free yield.
This utility giant has raised its dividend for 51 consecutive years. Moreover, Fortis is well-positioned to continue this trend, with plans for further dividend increases supported by its growing rate base.
Fortis’s $26 billion capital program will help expand its rate base at a compound annual growth rate (CAGR) of 6.5% through 2029. This investment will enable Fortis to enhance its earnings and grow its quarterly distributions. Fortis projects its dividend to increase at a CAGR of 4-6% over the same period, reflecting its commitment to enhancing shareholder value.
In summary, Fortis’s solid rate base growth, robust transmission investment pipeline, and opportunities arising from the energy transition position the company well for long-term growth. This will enable Fortis to grow its dividend consistently. Further, it offers a well-protected yield of about 4.2%.
Dividend stock #3
Top Canadian banking stocks have established themselves as dividend powerhouses, with many of these institutions boasting a remarkable history of regular cash distributions that spans over a century. This commitment to shareholder returns positions them as reliable investments for those seeking to generate a passive-income stream.
Among the prominent players in the Canadian banking sector, Bank of Montreal (TSX: BMO) distinguishes itself with an unparalleled record of dividend payments. This financial services giant has paid consistent dividends for approximately 195 years, demonstrating a strong likelihood that this trend will continue for many decades to come.
Over the past 15 years, Bank of Montreal’s dividend grew at a CAGR of 5%. This solid dividend history reflects the bank’s ability to consistently grow its earnings across various market conditions.
Bank of Montreal’s earnings are projected to grow at a high single-digit rate in the medium term, providing a solid foundation for continued dividend growth. The bank is well-positioned to leverage its diversified revenue streams, growing deposit base, and operational efficiency to boost its earnings and payouts. Furthermore, Bank of Montreal’s robust balance sheet and stable credit performance enhance its prospects for sustained growth. Currently, the bank offers a yield of approximately 5%, making it an attractive option for income investors.
