Imagine earning a 23.4% dividend yield on your original investment—does that sound too good to be true? That’s exactly what long-term investors in goeasy (TSX: GSY) stock have achieved over the years. Dividend-growth stocks don’t just provide steady passive income; they increase payouts over time, shielding investors from inflation while compounding wealth.
Here are three standout Canadian dividend stocks with strong dividend growth potential that could set you up for rising income and financial security in the years ahead.
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goeasy stock: A dividend-growth investor’s dream
Following a decade of impressive dividend raises, goeasy has quietly become a top Canadian dividend-growth stock. The alternative lender, which provides personal and home equity loans to Canadians, has increased its dividend for 10 consecutive years and looks set to do so again.
The most recent goeasy dividend hike was a staggering 21.9% in 2024. While the current dividend yield of 2.6% may not seem eye-catching, long-term investors have been well rewarded. A decade ago, goeasy’s dividend yield was just 1.9%. But thanks to consistent growth, investors who bought shares at that time are now earning a 23.4% yield on their original investment.
goeasy’s dividend payout rate in 2024 is under 25% of earnings. Management has room to raise annual payouts. With analysts expecting an 18% dividend growth rate over the next two years, goeasy could continue rewarding patient shareholders with rising payouts.
Shares trade cheaply at a forward price-to-earnings (P/E) multiple of 9.3. A forward price-to-earnings-to-growth (PEG) ratio of 0.9 implies the stock could be undervalued given its strong earnings growth potential.
Power Corporation of Canada: A hidden gem with a high yield
Power Corporation (TSX: POW) is a financial powerhouse, owning controlling stakes in Great-West Lifeco (an insurance giant) and IGM Financial (Canada’s largest non-bank asset manager) and two alternative asset management businesses. Despite its strong business model, the stock trades at a 24% discount to its net asset value (NAV), making it an attractive option for income-focused investors.
Power Corporation has raised its dividend for 10 straight years, with the latest increase coming in at 7.1% for 2024. The dividend currently yields a generous 5.1% and remains well-supported, with a payout ratio below 65% of earnings.
Another factor working in investors’ favour is the company’s ongoing share buybacks. Since Power Corporation’s stock trades at a significant discount to its net asset value, repurchasing shares helps boost shareholder returns over time.
At a forward P/E of just 8.6 and a PEG ratio of 0.7, the stock appears undervalued. Long-term investors could benefit from both dividend increases and capital appreciation as the market recognizes Power Corporation’s true worth.
Brookfield Renewable Partners: Sustainable dividends from a global leader
Brookfield Renewable Partners (TSX: BEP.UN) is a top choice for investors looking to benefit from a potential clean energy boom while earning a reliable and growing passive income stream. The company operates one of the world’s largest renewable power platforms, with hydroelectric, wind, solar, and energy storage assets across multiple continents.
With 15 consecutive years of dividend growth, Brookfield Renewable has proven its commitment to returning cash to shareholders. The stock currently offers an attractive 6.6% dividend yield, making it a compelling option for those seeking high-income yields today and dividend increases in the future.
Brookfield Renewable also has a massive development pipeline of 200,000 megawatts, which is nearly five times its current capacity of under 40,000 megawatts. This expansion could fuel future growth for decades and position the company as a dominant force in the global renewable energy sector. As the company expands, investors could see even higher dividends down the road.
Investor takeaway
Investing in dividend growth stocks can be a game-changer for building long-term wealth. goeasy, Power Corporation, and Brookfield Renewable each offer unique advantages: goeasy provides rapid dividend growth, Power Corporation combines value with a high yield, and Brookfield Renewable offers sustainability with strong payouts.
By owning companies that consistently increase their dividends, investors can enjoy rising passive income while benefiting from potential stock price appreciation. Over time, that combination can create significant financial security and wealth growth for a richer and happier retirement.
