Canadians looking for reliable dividend stocks could consider fundamentally strong businesses with solid payouts. These Canadian companies have a growing earnings base and are most likely to continue to pay and increase their dividend distributions in the coming years, irrespective of the market conditions.
Against this background, let’s explore five stocks for Canadian dividend investors that have the potential to generate steady and growing passive income in the coming years.
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Dividend stock #1
Fortis (TSX: FTS) is one of the most reliable dividend stocks Canadian investors could consider. The electric utility company has a defensive business model and owns rate-regulated assets that generate predictable earnings. This stability enables Fortis to pay higher dividends irrespective of market conditions.
Fortis has raised its dividends for 51 years, making it a Dividend King. Thanks to its resilient business, growing rate base, and expansion of low-risk earnings projects, Fortis forecasts its annual dividend to grow by 4–6% through 2029. Further, its payouts look well-protected as its energy transmission and distribution assets are poised to generate solid earnings in all market conditions. Currently, it offers a healthy yield of 4.1%.
Dividend stock #2
Canadian Natural Resources (TSX: CNQ) is another attractive dividend stock. It has consistently rewarded its shareholders by growing its dividend at an exceptional pace. For instance, this oil and gas company has increased its dividend at a CAGR of 21% in the past 25 years. The resiliency of its payouts reflects its ability to generate solid adjusted funds flow through its high-return, low-capital-intensive projects and long-life, low-decline assets.
The company’s focus on increasing production and improving efficiency will continue to drive higher earnings, returning significant cash to its shareholders. Moreover, Canadian Natural Resources’s strong balance sheet and ample liquidity will likely position it to accelerate its growth through acquisitions. Currently, it offers an attractive yield of 4.5%.
Dividend stock #3
Telus (TSX: T) is known for its solid dividend growth rate and high yield, making it a must-have stock for Canadian dividend investors. The leading wireless service provider has paid over $21 billion in dividends since 2004. Moreover, it has increased its dividend 27 times since 2011. Besides growing its dividends, Telus offers a high yield of over 8%.
Telus’s dividends are supported by its ability to deliver profitable growth. The expansion of its PureFibre Network and 5G infrastructure bode well for future growth. Further, its growing customer base, lower churn, and expansion into high-growth avenues such as cybersecurity and digital transformation will likely continue to drive earnings and its payouts.
Dividend stock #4
Brookfield Renewable Partners (TSX: BEP.UN) is an attractive dividend stock. This renewable energy company has been raising its dividend at a CAGR of 6% since 2001. Thanks to its highly contracted and durable cash flows, the company sees 5–9% annual growth in its dividends. Further, it offers a compelling yield of about 5.8%.
Brookfield’s highly diversified renewable energy assets, power-purchase agreements, and long-term contracts will drive its cash flows, enabling it to grow its dividends. Further, Brookfield’s large operating fleet and robust development pipeline of renewable power-generating facilities position it well to capitalize on the growing green energy demand and deliver consistent fund flows. The company’s focus on strategic acquisitions and investments in innovative solutions like battery energy storage will further accelerate its growth.
Dividend stock #5
Toronto-Dominion Bank (TSX: TD) has paid dividends for 167 years, making it an attractive bet for Canadian dividend investors. Moreover, since 1998, the Canadian financial services giant has grown its dividend at a CAGR of 10%. TD stock’s solid dividend-growth history shows its ability to generate higher earnings.
The financial services company’s diversified revenue stream, steady credit performance, growing loans and deposits, and operating efficiency position it well to continue to generate solid earnings. Further, its accretive acquisitions will accelerate its growth rate, supporting higher payouts. This banking giant has a sustainable payout ratio of 40–50% and offers a compelling yield of over 5%.
