Canadian dividend stocks that consistently and regularly increase their dividend are the best kind to own. Why? For the most part, a stock can’t (or shouldn’t) increase its dividend if it is not also growing earnings per share and/or cash flows per share. The best dividend stocks are those that are steadily growing.
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Get a double play on earnings and dividend growth
You get a double play when you own these stocks. Firstly, you get the benefit of your dividend income stream compounding higher. A stock with a small initial yield can become a substantial yield on cost if its dividend rises quickly.
Secondly, you get the benefit of faster stock appreciation. A stock that is growing tends to get a better market valuation multiple. Likewise, steady earnings per share growth often translates into equivalent stock appreciation.
If you are looking for Canadian stocks that are benefitting from a dividend double play, here are three to look at today.
A Canadian industrial stock with a rising dividend
TFI International (TSX: TFII) has delivered exceptional returns for investors over the years. Its stock is up 375% in the past five years. However, its stock has flatlined after a string of tough quarters. TFI is a major provider of freight and transportation services in Canada and the United States.
Unfortunately, the North American freight environment has drastically declined in the past year. It also has some operational issues that it is working to improve right now. These factors have impacted near-term results.
The good news is that the company continues to generate substantial free cash flows. Once the economic environment normalizes, it will be primed to generate even more cash. That puts it well positioned for further acquisition growth in the years ahead.
TFI has raised its dividend by a 14.5% compounded annual growth rate (CAGR) since 2015. Last quarter, it just announced a 13% increase to its quarterly dividend. This Canadian stock only yields 1.25%. However, if it can return to growth in 2025 (and beyond), there could be plenty of rewards for shareholders ahead.
A top Canadian growth stock
Propel Holdings (TSX: PRL) has been a dividend all-star as of late. It has raised its dividend per share every quarter since the fourth quarter 2023. Its $0.14 per share quarterly dividend today is up 47% since 2023.
Propel is a non-prime lender that operates through a mix of partnerships and online platforms. Its proprietary AI loan platform allows it to underwrite many loans efficiently and effectively. It can scale its platform with limited incremental cost, so margins are expected to continue rising.
This company has been growing earnings per share (EPS) by +50% over the past few years. If it can continue its growth trajectory, there are plenty of more dividend increases to come. It yields 1.6% today.
A top dividend record in Canada
Canadian Natural Resources (TSX: CNQ) is one of the greatest dividend stocks in Canada. It has increased its dividend for 25 consecutive years by a CAGR of 21%! After it announced its acquisition of Chevron Alberta’s oil sand assets, it raised its 2025 quarterly dividend by 7%.
Canadian Natural might be involved in the cyclical energy industry. However, it has a built a resilient business that should withstand the ups and downs. Not only is it a low-cost, efficient producer, Canadian Natural has multiple decades of energy reserves it can unlock at very little cost.
The recent acquisition only enhanced the longevity of this business. This Canadian stock yields 4.5% right now.
