Investing in Canadian stocks with a high dividend-growth rate, sustainable payout, and strong fundamentals can help you earn significant passive income over time. Moreover, reinvesting these dividends can give a substantial boost to your overall returns in the long term. With this backdrop, here are five top TSX stocks that could continue to grow their dividend at a solid pace.
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Top dividend-growth stock #1
Canadian Natural Resources (TSX: CNQ) is one of the top dividend-paying stocks with a stellar history of distribution and growth. For instance, this oil and gas producer has consistently rewarded its shareholders, increasing its dividend for 25 consecutive years. Even more remarkable is the pace of growth. The energy company’s dividend spots a compound annual growth rate (CAGR) of 21% over this period.
The company’s portfolio includes long-life, low-decline assets that ensure stable production over time. Moreover, operational efficiency and a strong balance sheet enable it to generate consistent earnings and substantial distributable cash flow. Additionally, Canadian Natural Resources’s focus on strategic acquisitions and its ability to execute low-capital, high-growth projects position it well to grow its dividend at a solid pace.
Top dividend-growth stock #2
goeasy (TSX: GSY) is another top dividend growth stock. Over the past decade, this subprime lender’s revenue and earnings grew at a double-digit rate. This has enabled it to increase its dividends at a high growth rate. Notably, goeasy has increased its dividend for 10 consecutive years. The financial services company’s dividend jumped about 113% between 2020 and 2023. Moreover, goeasy raised its dividend by 21.9% in February 2024.
This dividend-growth streak will likely continue in the coming years. The company’s growing consumer loan portfolio, wide product range, and increasing funding capacity will support its top line. Further, higher sales, a focus on high-quality loans, solid credit underwriting capabilities, and operational efficiencies could lead to double-digit earnings growth, supporting higher dividend payments.
Top dividend-growth stock #3
Canadian National Railway (TSX: CNR) stock is known for its defensive business model, offering stability to your portfolio. However, what stands out is the company’s high dividend growth rate. Canadian National Railway operates an extensive rail network and is a key player in Canada’s supply chain. Its services are essential to the economy, adding stability to its operations and supporting higher payouts.
Canadian National Railway has increased its dividend for 28 consecutive years. Moreover, Canadian National Railway’s dividend grew at a CAGR of 15% since 1996. Its resilient business model, diversified exposure to various sectors, efforts to improve operational efficiency, and focus on expanding its rail network position will help it deliver steady earnings and dividend growth.
Top dividend-growth stock #4
Cogeco Communications (TSX: CCA) is another top TSX stock known for consistently growing its dividend at a solid pace. This telecommunications and internet services provider has increased its dividend since fiscal 2010. Moreover, its dividend grew at a CAGR of 10.2% in the last five years. Its stable business model, growing scale, and operational efficiency support its cash flows and payouts.
Cogeco is investing in strengthening its networks, expanding its fibre-to-the-home high-speed internet footprint, and economically deploying wireless services in Canada and the United States. These efforts will broaden its market reach, drive its revenues, and support future earnings and dividend payments.
Top dividend-growth stock #5
Canadian communications giant Telus (TSX: T) will reward its shareholders with a high dividend growth rate. The company has increased its dividend 27 times since 2011. Notably, it recently raised its quarterly dividend by 7% to $0.4023 per share. Moreover, through its multi-year dividend-growth program, Telus targets semi-annual dividend increases, with annual increases in the range of 7% to 10%.
The company’s focus on margin-accretive customer expansion, lower churn, and operating efficiency will enable it to deliver profitable growth and support its dividend payments. Moreover, the expansion of its pure fibre and wireless broadband networks augur well for growth and will likely support its payouts.
