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Investors looking for stocks for long-term financial goals like retirement and creating a dividend fortune should focus on fundamentally strong ones that generate a steady and growing income stream over time. These stocks will likely deliver steady dividends regardless of market conditions. With this background, here are two Canadian dividend stocks with promising growth potential, ideal for a financially secure retirement.
Dividend stock #1
Enbridge (TSX:ENB) is a must-have Canadian stock for creating a dividend fortune. This energy infrastructure company’s highly diversified business model, resilient earnings, and growing distributable cash flow (DCF) support its dividend payments and growth. Moreover, its payout ratio of 60-70% of DCF is sustainable in the long term, making it a reliable bet.
Thanks to its growing DCF per share, Enbridge has uninterruptedly increased its dividend for three decades. Moreover, this Dividend Aristocrat currently offers a high yield of 5.9%.
The company’s robust pipeline network connects key supply and demand regions, maintaining high utilization rates and driving predictable earnings and cash flow. Supported by long-term contracts, power-purchase agreements, and regulated tolling frameworks, Enbridge generates a stable, low-risk cash flow stream immune to commodity price fluctuations. This stability enables it to enhance shareholder returns consistently.
Looking ahead, Enbridge anticipates its earnings and DCF to grow at a compound annual growth rate (CAGR) of 3% in the long term. Moreover, Enbridge’s dividend is projected to increase in line with the DCF per share.
Enbridge’s high asset utilization rate, secured growth projects, and strategic acquisitions, including three U.S. gas utilities, are expected to expand its earnings base and support its DCF. Meanwhile, its renewable energy segment positions it well to capitalize on energy demand and benefit from the ongoing shift towards cleaner energy.
Overall, with its diversified assets, growing cash flow, strong balance sheet, and strategic acquisitions, Enbridge will likely enhance its shareholder value through higher dividend payments.
Dividend stock #2
Fortis (TSX:FTS) is another top stock to build a dividend fortune. The leading Canadian utility company is known for its resilient payouts, growing dividend, and well-protected yield. Further, the company offers visibility over future dividend growth, making it a compelling investment to generate worry-free and predictable income.
Fortis derives 99% of its earnings from regulated utilities. These assets add stability to its business and enable it to offer reliable payouts. Thanks to its rate-regulated asset base, Fortis generates predictable earnings and cash flows, allowing the company to maintain and grow its dividend regardless of market conditions. Additionally, 93% of Fortis’s operations are focused on energy transmission and distribution, a low-risk segment known for generating stable returns in all economic situations.
Fortis projects its rate base to grow at a CAGR of 6.5% through 2029. This expansion is expected to fuel annual dividend increases of 4-6%. Besides consistently raising its dividend, Fortis stock offers a well-protected dividend yield of about 4%.
In summary, Fortis’s resilient business model, growing rate base, consistent dividend growth, and commitment to enhance shareholder value make it a compelling investment for anyone looking to build a secure income portfolio.
