Canadian dividend investors are searching for reliable dividend-growth stocks to add to their self-directed Tax-Free Savings Account (TFSA) or non-registered account focused on generating steady passive income.
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Fortis
Fortis (TSX: FTS) recently increased its dividend by 4.2%. The hike marks the 51st consecutive annual dividend increase for the company’s shareholders. This is the kind of dividend stock you want to look for when building a passive-income portfolio.
A quick peek at the stock chart also indicates that steady dividend growth supported by rising revenue and higher cash flow tends to be positive for the share price over the long run.
Fortis is working on a $26 billion capital program that is expected to boost the rate base from $38.8 billion in 2024 to $53 billion in 2029. As new assets go into service, the rise in revenue and cash flow should support planned annual dividend increases of 4% to 6% over the next five years. Investors who buy Fortis stock at the current level can get a dividend yield of 4%.
Enbridge
Enbridge (TSX: ENB) increased its dividend in each of the past 29 years, and more gains should be on the way. The company recently completed its US$14 billion acquisition of three natural gas utilities in the United States. The move adds good rate-regulated revenue streams and further diversifies the asset base.
Enbridge also has a $24 billion capital program on the go that will provide an additional boost to revenue and cash flow in the next few years. Investors who buy ENB stock at the current price can get a dividend yield of 6.25%
TC Energy
TC Energy (TSX: TRP) is another energy infrastructure stock with an attractive dividend. The board has given investors a raise in each of the past 24 years, and additional dividend growth should be expected as TC Energy continues to build new assets in the natural gas transmission and power-generation segments.
TC Energy had to take on extra debt to complete its Coastal GasLink pipeline project last year. Commercial operation is expected to begin in 2025, providing a boost to cash flow. Management did a good job of monetizing non-core assets over the past year to reduce debt and shore up the balance sheet. The company also recently completed the successful spin-off of its oil pipeline business. TC Energy’s stock price is up 36% in the past year after an extended slide that saw it fall from $74 in 2022 to as low as $45 last year. The shares are back to $67.50 at the time of writing but still trade below the 2022 high. At the time of writing, TRP provides a 4.9% dividend yield.
The bottom line on top TSX dividend stocks
Near-term volatility should be expected after the big rallies that occurred in the past six months. However, if you have some cash to put to work in a self-directed portfolio focused on passive income, these stocks deserve to be on your radar to add on a pullback. Fortis, Enbridge, and TC Energy all pay good dividends that should continue to grow.
