Investing in top-quality Canadian stocks with a solid track record of dividend payments and visibility over future earnings and payouts can help generate worry-free passive income. With this backdrop, here are five dividend stocks with fundamentally strong businesses and growing earnings bases to double up on right now.
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Dividend stock #1
Shares of electric utility company Fortis (TSX: FTS) should be on your radar for worry-free and growing passive income. The company’s rate-regulated assets generate predictable earnings regardless of economic situations, enabling Fortis to pay and increase its dividend with each passing year. Notably, Fortis has increased its dividends for 51 years in a row. Moreover, it is on track to maintain this momentum in the upcoming years.
Fortis projects its rate base to expand at a compound annual growth rate (CAGR) of 6.5% and reach $53 billion by 2029. This rate base expansion will drive its earnings and future payouts. Thanks to its low-risk earnings base, Fortis forecasts a 4-6% annual increase over the next five years. While the company is likely to grow its dividend, its payouts are well-protected through its energy transmission and distribution assets that generate steady earnings in all market conditions.
Dividend stock #2
Passive income investors could double up on TC Energy (TSX: TRP) stock for its solid payout history, visibility of future distributions, and high dividend yield. This energy infrastructure company has consistently increased its dividend in the last 24 years. Its highly regulated and contracted assets generate resilient earnings that support its payouts.
TC Energy is poised to benefit from higher system utilization, a $31 billion secured capital program, rate-regulated assets, and long-term contracts. Further, its focus on productivity savings and debt reduction augurs well for growth. In the long run, TC Energy expects to increase its dividend by 3-5% per year. Moreover, it offers a high yield of 5.6%.
Dividend stock #3
Canadian Natural Resources (TSX: CNQ) is an attractive dividend stock to double up right now. This oil and gas company has been growing its dividend at a solid pace, returning significant cash to its shareholders. For instance, the energy company has raised its dividend at a CAGR of 21% in the past 25 years. Moreover, it offers a solid yield of over 4.5%.
The company’s long life, low-decline assets, ability to grow production, high-return, low-capital-intensive projects, and focus on driving efficiency position it well to generate solid adjusted funds flow, which will support higher dividend payouts. Moreover, Canadian Natural Resources has a strong balance sheet and ample liquidity to accelerate its growth rate through acquisitions and pay higher dividends.
Dividend stock #4
Telus (TSX: T) is a dependable dividend stock to double up right now. Canada’s leading communications Company is known for enhancing its shareholder value through higher dividend payments. Notably, Telus has raised its dividend 27 times since 2011 and paid over $21 billion in dividends since 2004. Further, Telus stock offers an attractive yield of over 7%.
While the company offers a high yield, its distributions are supported by its ability to grow profitably and a sustainable payout ratio of 60-75% of free cash flow. The expansion of its PureFibre Network and 5G infrastructure will drive its customer base and retention. Moreover, its expansion into high-growth segments such as cybersecurity and digital transformation and focus on lowering costs bode well for future earnings growth and payouts.
Dividend stock #5
Enbridge (TSX: ENB) is a no-brainer dividend stock to double up right now. Its highly diversified revenue stream, higher utilization of its liquids pipeline, contractual arrangements, and low-risk growth projects drive its earnings, distributable cash flow (DCF), and dividend payments. Enbridge raised its dividend for 29 consecutive years and offers an over 6% yield.
Enbridge’s extensive liquids pipeline, power-purchase agreements, multi-billion dollar growth projects, growing utility-like projects, and cost-of-service arrangement will likely drive its DCF and support future payouts. Enbridge’s management projects a mid-single-digit increase in its earnings per share and DCF per share in the long run, which will drive its higher dividend payments in the future.
