Some of the market’s best dividend-growth stocks can be terrific bets over the span of many years or even decades. Undoubtedly, if you’re just getting started out in the investing world, the names that provide steady dividend-growth trajectories could make for a great place to start.
While many folks enter the stock markets with the intent of scoring big capital gains by buying low and selling high, I think that most long-term thinkers would be far better served by buying and hanging onto their shares for the extremely long term.
When it comes to the dividend growers, you’re getting some pretty consistent raises every single year. Some stocks with hefty yields (let’s say 4-5%) can grow their payouts by a single-digit rate every single year, while others (think yields closer to 2%) can experience high single-digit or even double-digit annual dividend growth over time.
And if you can snag the wide-moat companies that can continue raking in the free cash flow during turbulent times for the economy, you may have an even better candidate to put in your TFSA (Tax-Free Savings Account), RRSP (Registered Retirement Savings Plan), or even your FHSA (First Home Savings Account), assuming you’re a prospective first-time homebuyer who’s looking to achieve the dream of owning your own home one day.
Either way, let’s get into some top-tier dividend growth stocks that I would dub as “dividend-growth knights.” Of course, there’s no formal definition of a dividend growth knight. However, I think that only the “moatiest” and “growthiest” of dividend payers deserve to be in the group.
CN Rail
When it comes to dividend growth over the long run, CN Rail (TSX:CNR), I believe, ought to be considered the gold standard. After a few years of rough trekking, shares of the name go for 18.2 times trailing price to earnings (P/E), well below where it’s traded in recent years (closer to 20 times).
Further, the 2.15% dividend yield may not seem all too generous until you have a glimpse at the company’s dividend-growth track record. Simply put, CN Rail is one of Canada’s top dividend growers. Over the next couple of years, I expect the dividend to grow at a high single-digit rate (7-9%) as Canada’s economy enjoys a few more rate cuts from the Bank of Canada.
Additionally, strength in the U.S. market could help give the North American rail giant a nice jolt. Either way, CN Rail is an efficient operator, and its dividend-growth rate is nothing short of attractive for those who seek a nearly permanent TFSA holding.
Canadian Natural Resources
Canadian Natural Resources (TSX:CNQ) is a top dog in Canada’s energy patch. Over the past five years, shares are up 163%, a remarkable gain for an energy heavyweight. Though the share price momentum has slowed a bit (up 10.5% in the past year), I still view CNQ as a great buy for the dividend. It’s yield-heavy and positioned to grow at a consistent rate over time.
At writing, shares yield 4.43%, and if the well-run oil juggernaut can continue moving at full speed, I’d not be too shocked if the dividend were to outgrow most other dividend-growth gems out there. So, if you’re bullish on energy, I’d look no further than the name.
So, there you have it. Canadian National and Canadian Natural are two dividend-growth giants that are worth stashing away for the long haul if you’re a fan of dividend raises.
