The Canadian equity markets performed well last month, with the S&P/TSX Composite Index rising 6.2%. Falling interest rates and optimism over Donald Trump’s pro-growth policies have boosted investors’ optimism, driving the equity markets. Also, Canada’s third-quarter GDP (gross domestic product) declined from 2.1% in the second quarter to 1%, raising the hopes of steep rate cuts in December, thus supporting stock price growth.
However, the concerns over global economic slowdown and geopolitical tensions persist. So, if you are also worried about these uncertainties and the substantial increase in equity markets this year, here are three reliable dividend stocks you can buy to strengthen your portfolios. These three stocks are less susceptible to market volatility, given their stable cash flows and consistent dividend growth.
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Enbridge
Enbridge (TSX: ENB) has been paying dividends uninterrupted for 69 years and has increased its dividends for the previous 29 years, thus making it a top dividend stock to have in your portfolio. The diversified energy infrastructure company earns around 98% of its cash flows from long-term contracts, thus shielding its financials from market volatility. Around 80% of its EBITDA (earnings before interest, tax, depreciation, and amortization) is inflation-indexed. So, it generates stable and predictable cash flows, thus allowing it to raise its dividends at an annualized rate of 10% for the last 29 years, while its forward dividend yield stands at 6.04%.
Moreover, Enbridge has strengthened its natural gas utility business by acquiring three assets in the United States, making it the largest natural gas utility asset in North America. The company is progressing with its $28 billion secured capital program, with already making capital expenditure of $5 billion in the first three quarters. These investments could boost its financials and cash flows, thus facilitating its future dividend growth. Its financial position looks healthy, with available liquidity of $17.1 billion at the end of the third quarter.
Fortis
With 51 years of consecutive dividend growth, Fortis (TSX: FTS) is my second pick. The natural gas and electric utility company operates around 10 assets in Canada, the United States, and the Caribbean, serving 3.5 million customers. With 93% of assets involved in low-risk and regulated transmission and distribution business, the company generates stable financials irrespective of the broader market conditions, thus allowing it to raise its dividends consistently. With the quarterly dividend of $0.915/share, its forward yield stands at 3.93%.
Meanwhile, Fortis is investing around $26 billion from 2025 to 2029, with 99% of these investments in regulated assets. These investments could expand its rate base at 6.5% CAGR (compound annual growth rate). Along with these growth initiatives, favourable rate revisions and improving operating efficiencies could boost its financials in the coming years. The falling interest rates could also lower its interest expenses, thus improving its profitability. Considering all these factors, I believe Fortis would be an excellent buy in an uncertain outlook.
Bank of Nova Scotia
Bank of Nova Scotia (TSX: BNS) is another stock that has consistently rewarded its shareholders by paying dividends. It has been paying dividends since 1833. Also, it has raised its quarterly dividends at an annualized rate of 5.75% for the last 10 years, with its forward yield currently at 5.31%.
Meanwhile, falling interest rates could boost economic activities, driving credit demand. Lower interest rates could also lead to lower provision for credit losses, improving profitability. Meanwhile, BNS is enjoying deposit growth and net margin expansion. Its solid balance sheet, positive operating leverage, and productivity initiatives could continue to drive its financials in the coming quarters.
Focusing on deploying its capital in priority markets, BNS has also made a strategic investment in KeyCorp, which could boost its near-term profitability while further strengthening its United States business. Despite the healthy buying in the stock, BNS trades at an attractive next-12-month price-to-earnings multiple of 14, making it an excellent buy.
