Investing in top Canadian dividend stocks will likely enhance your portfolio’s income potential. Further, with an investment of, say, $1,000 right now, you can invest in the smartest Canadian stocks with strong fundamentals, a resilient business model, a growing earnings base, a robust dividend growth history, and visibility over future payouts.
Against this backdrop, here are the two smartest Canadian dividend stocks to buy now with $1,000.
Smartest dividend stock #1
Fortis (TSX:FTS) is one of the smartest dividend stocks to buy right now. The utility company has increased its dividend for 51 consecutive years. Further, the company’s management projects its future dividends to grow at a compound annual growth rate (CAGR) of 4-6% through 2029.
Fortis’s solid payouts are supported by its resilient rate-regulated business model. Approximately 99% of the company’s assets are tied to regulated utilities, ensuring stable and predictable earnings and cash flows. Furthermore, as an energy delivery company, 93% of its assets are dedicated to transmission and distribution, a segment characterized by low-risk operations. This model adds stability to Fortis’s business and translates into dependable payouts.
Looking ahead, Fortis is well-positioned to continue to enhance its shareholder value through its capital plan, diversified portfolio of regulated utility businesses, and opportunities within its service territories. The utility company’s $26 billion five-year capital plan is expected to increase the rate base from $38.8 billion in 2024 to $53 billion by 2029, translating into a five-year CAGR of 6.5%
With its resilient business model and growing rate base, the company could continue to increase its dividend at a healthy pace. Further, Fortis stock offers a worry-free dividend yield of over 4%.
Smartest dividend stock #2
Investors looking for the smartest dividend stocks could consider Enbridge (TSX:ENB) for its reliable payouts and high yield of about 6%. This energy infrastructure company has been paying dividends for 70 years. Further, Enbridge has increased its dividend three decades in a row.
Enbridge’s ability to consistently raise its dividends stems from its diversified revenue streams. The company operates across liquid pipelines, gas transmission and midstream operations, gas distribution and storage, and renewable power. These diverse segments reduce risk and generate steady cash flows, even during volatile market conditions.
The liquid pipelines business, a core revenue driver, benefits from high system utilization, which translates to strong free cash flow. Enbridge’s focus on asset optimization and cost-effective expansion further strengthens its earnings potential, supporting future dividend growth.
Additionally, the company is strategically positioned to capitalize on the growing demand for renewable energy. Its gas transmission and midstream operations, insulated from commodity price swings, provide stable and predictable cash flows. Meanwhile, its utility footprint ensures low-risk, regulated returns that support consistent earnings growth and dividend payments.
Enbridge’s investments in conventional and renewable energy assets and strategic acquisitions will likely bolster its low-risk earnings base. The company’s long-term contracts, power-purchase agreements, and regulated tolling frameworks provide a solid foundation for sustainable growth.
Enbridge projects mid-single-digit growth in its earnings and distributable cash flow (DCF) per share over the long term. This growth outlook suggests that Enbridge will continue increasing dividends in line with DCF. Moreover, with a payout ratio of 60-70% of its DCF, Enbridge ensures its dividends remain well-covered and sustainable.
