Dividend stocks are excellent additions to your portfolios as investors can benefit from both capital gains and dividend payouts. Given their consistent payouts, these companies are less susceptible to market volatility. Investors can reinvest the payouts to earn superior returns. Against this backdrop, let’s look at three top Canadian dividend stocks that could help compound your wealth.
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Enbridge
Enbridge (TSX: ENB) has enhanced investors’ returns through uninterrupted dividend payments for 69 years. The company operates highly regulated midstream, utility, and renewable energy businesses, generating stable and predictable cash flows, irrespective of the broader market conditions. These stable cash flows have allowed it to pay dividends uninterruptedly and also raise dividends for 30 years. It currently pays a quarterly dividend of $0.9425/share, representing a forward dividend yield of 5.87%.
Moreover, the Calgary-based energy infrastructure company is expanding its asset base and plans to put $6 billion worth of assets into service this year. Along with these investments, a higher utilization rate and cost savings from system optimization initiatives could boost the company’s financials. Amid these growth prospects, the company’s management has provided a healthy 2025 guidance, with the midpoint of its adjusted EBITDA (earnings before interest, tax, depreciation, amortization, and amortization) guidance representing a 9.4% year-over-year growth.
Enbridge’s management also projects a 7-9% annual adjusted EBITDA growth in the coming years. It expects its financial position to improve due to contributions from its recent acquisitions. Considering all these factors, I believe Enbridge would be an excellent buy.
Bank of Nova Scotia
Another dividend stock that could compound your wealth would be Bank of Nova Scotia (TSX: BNS), which has rewarded its shareholders with consistent dividends since 1833. Given its diverse revenue streams and extensive geographical presence across America, the company enjoys healthy financials and cash flows, allowing it to pay dividends consistently. It has also raised its dividends at a 4.5% CAGR (compound annual growth rate) for the last 10 years and offers a forward dividend yield of 5.66%.
As part of its five-year plan to improve the profitability of its international banking business, the financial services company has announced the transfer of its operations in Colombia, Costa Rica, and Panama to Davivienda in exchange for a 20% stake in the combined entity. With the decline in risk-weighted assets, the company’s CET1 (common equity tier-one) could improve by 10-15 basis points from this transaction. Further, the company has made a strategic investment of 14.9% in KeyCorp, which would increase its capital deployment in the United States. These growth initiatives could boost its financials, thus allowing it to continue rewarding its shareholders with healthy dividends.
Telus
Although the telecom sector has witnessed substantial pressure over the last few years, I have chosen Telus (TSX: T) as my final pick. Telcos enjoy healthy cash flows due to recurring revenue streams. Meanwhile, Telus has returned around $26 billion since 2004, including $21 billion in dividends and $5 billion in share repurchases. It has also raised its dividends 27 times since May 2011 and currently offers a juicy forward dividend yield of 7.69%.
Moreover, the demand for telecommunication services is rising amid the digitization of business processes and growth in remote learning and working. Meanwhile, Telus continues to strengthen its 5G and broadband infrastructure and acquire new spectrums to expand its services and boost its customer base. At the end of the third quarter, Telus’s 5G services covered 87% of the population, while 3.3 million premises used its broadband services. Along with these growth prospects, its emphasis on improving cost efficiency and falling interest rates could boost its profitability. So, I believe Telus is well-equipped to continue rewarding its shareholders with dividends and share repurchases.
