Historically, dividend stocks have beaten the broader equity markets. Besides, these companies are less susceptible to market volatility due to their consistent payouts, thus providing portfolio stability. Against this backdrop, let’s look at three dividend stocks you can buy and hold forever.
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Enbridge
Enbridge (TSX: ENB) operates a highly regulated midstream energy business transporting oil and natural gas across North America. It is also expanding its presence in the natural gas utility and renewable energy business. The company has paid dividends for 69 years amid its contracted or cost-of-service cash flows. Besides, the company has uninterruptedly grown its dividends for 30 years and currently offers an attractive forward dividend yield of 6.4%.
The diversified energy company has been expanding its asset base through its $27 billion secured capital program, with $5 billion already invested in the first three quarters of this year. Besides, the acquisition of three utility assets in the United States has lowered its business risks while boosting its cash flows from low-risk businesses. The management expects its EBITDA (earnings before interest, tax, depreciation, and amortization) to grow at 7–9% annually through 2026, while its DCF (discounted cash flows) per share is forecast to grow at a 3% CAGR (compound annual growth rate).
Given its healthy liquidity of $17.1 billion, reasonable valuation with an NTM (next 12 months) price-to-earnings multiple of 19.8, and healthy growth prospects, I believe investors can buy and hold Enbridge forever.
Fortis
Fortis (TSX: FTS) is another excellent dividend stock to have in your portfolio due to its regulated utility business and consistent dividend growth. The company’s financials are less susceptible to market volatility, with 99% regulated assets, of which 93% are involved in low-risk transmission and distribution businesses. Supported by its stable and predictable cash flows, the company has raised its dividends for 51 years. It also offers a healthy forward dividend yield of 4.1%.
Moreover, Fortis has expanded its asset base by investing $3.6 billion in the first nine months and is on track to invest $5.2 billion this year. Besides, the company has committed to invest around $26 billion from 2025 to 2029, which could grow its rate base at a 6.5% CAGR. The company has planned to generate around 70% of these investments from the cash generated from its operations and DRIP (dividend reinvestment plan). So, these capital investments would not substantially raise its debt levels. Amid these growth initiatives, the company’s management hopes to raise its dividend at an annualized rate of 4–6% through 2029.
Bank of Nova Scotia
I have picked the Bank of Nova Scotia (TSX: BNS), which has been paying dividends since 1833, as my final pick. Given its diversified revenue streams and expanded geographical presence, the financial service company generates healthy financials even during a challenging macro environment, thus allowing it to pay dividends at a healthier rate. The financial services company has also raised its dividends at an annualized rate of 5.8% for the last 10 years and currently offers a juicy yield of 5.4%.
Besides, the company has shifted its focus from Latin America to North America. It has made a strategic investment in KeyCorp, which could strengthen its United States business. Further, the bank’s financial performance is also improving, with its fiscal 2024 revenue and adjusted net income growing by 4.5% and 3.2%, respectively. Also, its operating leverage improved from -8.5% in the last fiscal year to 2.3%, while the CET1 capital ratio increased by 0.1% to 13.1%. So, I expect BNS to continue rewarding its shareholders at a healthy rate.
