Investors seeking reliable dividend stocks that keep paying them year after year should consider Canadian Dividend Aristocrats. These Canadian stocks have a proven track record of steadily increasing their dividends for decades. Moreover, these Dividend Aristocrats are blue-chip stocks with large market cap, well-established businesses, and a growing earnings base, ensuring their ability to sustain and enhance dividend distributions over time.
Against this backdrop, let’s look at two dividend-paying stocks expected to boost their dividends in the upcoming years.
Enbridge stock
Enbridge (TSX:ENB) is one of the most reliable dividend-paying Canadian stocks. The integrated energy infrastructure company has a diversified portfolio that generates solid distributable cash flows (DCF) to support its payouts. Thanks to its resilient business model and growing earnings and DCF per share, Enbridge raised its quarterly dividend for 30 consecutive years. Moreover, it offers an attractive yield of 5.9%.
The company benefits from higher utilization of its assets. Moreover, its assets are supported by long-term contracts, power-purchase agreements (PPAs), and regulated cost-of-service tolling frameworks. These factors add stability to Enbridge’s cash flows and enable it to sustain and grow its payouts.
The company’s liquid pipeline business will likely benefit from mainline toll escalators, higher system utilization, and secured growth projects. Further, Enbridge’s gas transmission and midstream operations are backed by a highly contracted system. Enbridge is also expanding its utility asset base. These assets will likely generate predictable cash flows, adding stability to its business during market volatility. Further, its recent acquisition of three U.S. gas utilities will expand Enbridge’s low-risk earnings base.
The company is also investing in the renewable power segment, which positions it well to capitalize on the growing demand for green energy.
Enbridge sees mid-single-digit growth in its earnings and DCF per share in the long term. Moreover, it intends to grow its dividend in line with DCF per share. Its resilient business, growing cash flows, solid dividend growth history, and visibility over future dividend growth make it a solid passive-income stock.
Canadian Utilities Stock
Canadian utility stocks are known for their reliable dividend payments. These companies operate rate-regulated assets that generate predictable and growing cash flows, creating a stable base for covering their payouts.
While the TSX has several top utility stocks, Canadian Utilities (TSX:CU) stands out for its unmatched record of dividend growth. This utility company raised its dividend for 52 consecutive years, the longest by any publicly traded Canadian stock. Moreover, it offers an attractive yield of 5.2% (based on its closing price of $34.33 as of January 20, 2025).
Canadian Utilities’s ability to sustain and grow its dividend payments stems from its regulated and contracted assets, which generate reliable earnings year after year. Moreover, Canadian Utilities’ continued investment in regulated assets to expand its rate base supports its earnings and higher dividend distributions.
Canadian Utilities plans to invest between $4.6 billion and $5 billion in its regulated utilities business through 2026. This capital commitment will drive incremental earnings and bolster its capacity to raise dividends.
The company is also focusing on enhancing its energy infrastructure assets. By optimizing operations and exploring non-regulated opportunities, such as electricity generation, energy storage, and clean fuels, Canadian Utilities is positioning itself for long-term growth. Further, these businesses will diversify their earnings base and accelerate growth.
In summary, Canadian Utilities’s low-risk earnings base, rate-regulated assets, solid dividend growth history, high yield, and resilient payouts make it a top stock to generate worry-free passive income.
