Top Canadian dividend stocks with a solid payout history, a growing earnings base, and sustainable yield can help generate decades of passive income. For instance, leading Canadian stocks have been consistently rewarding shareholders with regular dividends for years. So, if you want worry-free passive income, here are three fundamentally strong stocks worth buying right now.
Passive-income stock #1
Investors seeking decades of passive income could consider adding top Canadian utility stocks. These companies are known for their resilient and growing payouts. Notably, their rate-regulated businesses generate predictable cash flows, supporting steady dividend payouts. Among the leading utility stocks, investors could add Canadian Utilities (TSX:CU) to their portfolios.
Canadian Utilities offers natural gas and electricity services and has an unparalleled streak of dividend increases—52 consecutive years, the longest in Canadian corporate history. Moreover, Canadian Utilities stock offers a solid yield of about 5%.
Looking ahead, Canadian Utilities’s highly contracted and regulated earnings base will likely support future dividend growth. The company continues to invest in regulated utilities and long-term, contracted assets, which will expand its rate base and earnings, driving higher dividend payments. Further, its payout ratio is sustainable in the long term.
Passive-income stock #2
Top Canadian energy infrastructure companies are known for their resilient dividend payouts. Enbridge (TSX:ENB) is a reliable stock in the energy infrastructure space that is worth buying for decades of passive income. Enbridge has paid dividends for about seven decades. Moreover, it has increased them by nearly three decades.
Enbridge’s extensive network of liquid pipelines across key supply and demand zones, high system utilization rate, power-purchase agreements, and regulated tolling frameworks position it well to generate solid earnings and distributable cash flow (DCF) per share, supporting its dividend increases.
Further, Enbridge’s continued investments in traditional and renewable energy assets, low-risk utility-like projects, and strategic acquisitions augur well for long-term growth and will likely support its future payouts.
Enbridge projects a mid-single-digit increase in its EPS and DCF per share, positioning it well to grow its future dividend. It offers a high yield of over 6% and has a sustainable payout ratio of 60-70% of its DCF.
Passive-income stock #3
The leading Canadian banks have been paying dividends for decades, making them reliable investments for passive-income investors. For instance, top Canadian financial institutions have uninterruptedly paid dividends for over a century. Bank of Montreal (TSX:BMO) looks attractive among these firms for its longest-running dividend-payout record.
This Canadian financial services company has paid dividends for 195 years, which reflects the resilience of its payouts. Moreover, the bank has grown its dividend at a CAGR of 5% over the past 15 years, rewarding shareholders with steady income growth.
Bank of Montreal continues to capture a larger share of its core markets, supported by its robust customer acquisition strategies. Further, its diversified revenue base, expansion into high-growth markets, solid credit performance, and operating efficiency augur well for earnings growth and future dividend payments.
The financial services giant expects its earnings to grow at a high single-digit rate, which will enable it to grow its future dividend at a healthy pace. Bank of Montreal has a conservative payout ratio and offers a dividend yield of 4.5%.
