Investors planning to generate steady passive income in 2025 could consider top dividend stocks. These Canadian stocks have a track record of solid dividend payment and growth. With solid fundamentals and a growing earnings base, these dividend stocks have the potential to continue to pay and increase their distributions with each passing year.
Against this background, let’s explore three top Canadian stocks to generate solid passive income in 2025 and diversify your portfolio.
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Fortis
Investors seeking worry-free passive income could consider utility giant Fortis (TSX:FTS). This high-quality dividend stock has consistently paid and increased its dividend for years, regardless of economic cycles. For instance, Fortis has raised its dividend for 51 consecutive years. Besides steady payouts, Fortis offers an attractive dividend yield of 4.1%, making it a compelling bet for investors seeking to generate a growing passive income.
Fortis’s earnings come from regulated utility assets, implying its payouts are well-covered and sustainable. Furthermore, 93% of its operations are related to energy transmission and distribution, which makes its business resilient and ensures predictable growth.
Fortis’s rate base is projected to expand, driving its future earnings and supporting higher dividend payouts. The company expects its rate base to increase at a compound annual growth rate (CAGR) of 6.5% through 2029. Thanks to its defensive business model, low-risk earnings base, regulated cash flow, and growing rate base, the company could continue to increase its dividend in the coming years. The company expects to increase its dividends by 4-6% annually while its payouts remain well-protected.
Enbridge
Enbridge (TSX:ENB) is another top Canadian stock that could help generate a growing passive-income stream. This energy infrastructure company has uninterruptedly paid dividends for about seven decades while raising the same for 30 years. Besides its stellar dividend-growth history, the energy giant offers an attractive yield of 6.2%.
Enbridge’s resilient and durable payouts reflect the company’s ability to grow its earnings and distributable cash flow (DCF). Thanks to its diversified revenue streams, high-quality assets, and higher utilization of its pipeline system, the company is well-positioned to grow its dividend in the future.
Enbridge’s extensive liquids pipeline network, long-term contracts, and regulated tolling frameworks drive consistent growth. Additionally, its ongoing investments in traditional and renewable energy assets, strategic acquisitions, and secured capital projects will further enhance its cash flow and support dividend growth.
Enbridge projects a mid-single-digit growth in its earnings and DCF per share in the long term, enabling higher dividend distributions. Moreover, its payout ratio of 60-70% of DCF is sustainable.
Toronto-Dominion Bank
Toronto-Dominion Bank (TSX:TD) is one of the top banking stocks to generate reliable passive income. It is known for its consistent dividend payments. Notably, the Canadian financial services giant has paid dividends for 167 years. Moreover, since 1998, the bank has grown its dividend at a CAGR of 10%, the highest among its peers.
Toronto-Dominion Bank’s solid dividend-growth history reflects its ability to consistently generate growing earnings and its steady credit performance. The financial services company’s diversified revenue stream, growing loans and deposits, and operating efficiency position it well to continue to generate solid earnings. Further, its accretive acquisitions accelerate its growth rate, supporting higher payouts.
The bank has a sustainable payout ratio of 40-50% and offers a compelling yield of over 5% near the current market price.
