The leading Canadian dividend stocks can help you earn regular passive income. Moreover, these fundamentally strong companies will likely add stability to your portfolio and generate steady capital gains over time, making them compelling long-term bets. While investing, investors should focus on TSX stocks with a solid track record of distribution, decent yield, a growing earnings base, and visibility over future dividend growth. These companies are most likely to pay and even increase their payouts in the long term.
Against this background, here are five Canadian dividend stocks I think everyone should own.
Source: Getty Images
Canadian dividend stock #1
Shares of the electric utility company Fortis (TSX:FTS) are a must-have for worry-free income in all market conditions. The Canadian utility company has a defensive business model and rate-regulated cash flows that enable it to generate growing and predictable earnings, supporting higher dividend distributions. Thanks to its solid financials, Fortis raised its dividend for 51 consecutive years. Further, it offers a well-protected yield of about 4%.
Fortis expects its dividend to increase at a compound annual growth rate (CAGR) of 4-6% through 2029. Its growing rate base will likely support its higher payouts. Fortis’ multi-billion capital plan will help it expand its rate base at a CAGR of 6.5% through 2029, driving its earnings and higher payments.
Canadian dividend stock #2
Brookfield Renewable Partners (TSX:BEP.UN) is a top dividend stock to own. The company is known for consistently rewarding its shareholders with higher dividends and will likely benefit from the ongoing transition towards green energy. Almost 90% of its power generation is contracted, with approximately 70% of revenue linked to inflation. This enables it to expand its operating margins and offer higher dividends.
Brookfield Renewable Partners’ dividend has grown at a CAGR of 6% since 2001. Moreover, the renewable energy company targets a dividend growth of about 5-9% annually in the coming years and offers a high yield of about 7%. Its large operating fleet, extensive development pipeline, and investments in battery energy storage will likely accelerate its growth. Moreover, it will likely benefit from significant re-contracting opportunities.
Canadian dividend stock #3
Canadians could consider adding TC Energy (TSX:TRP) stock to their portfolios for a growing passive-income stream. This energy infrastructure company’s highly regulated and contracted asset base generates resilient cash flows regardless of market conditions, supporting higher payouts. TC Energy raised its dividend at a CAGR of 7% since 2000. Further, it projects a 3-5% annual increase in its dividends in the long run.
Looking ahead, TC Energy’s bottom line will benefit from higher system utilization, productivity savings, and debt reduction. Furthermore, its multi-billion secured capital projects will drive its contracted and regulated asset base, leading to higher earnings and payouts. TC Energy stock currently offers a compelling yield of 5.8%.
Canadian dividend stock #4
Canadian Utilities (TSX:CU) is another top income stock to buy and hold for decades. With its resilient business model and consistent earnings flow growth, this utility giant has raised its dividend for 52 consecutive years, the longest dividend-growth streak among all Canadian publicly traded stocks. Moreover, it currently offers a high yield of over 5%.
Canadian Utilities’s regulated and contracted assets will likely generate solid low-risk earnings in the coming years and support higher payouts. The company’s strategic investments to expand its regulated asset base are expected to further bolster its earnings and facilitate continued dividend growth.
Canadian dividend stock #5
Canadian banking giant Bank of Montreal (TSX:BMO) is a dependable income stock. With 195 consecutive years of dividend payments, it has the longest streak of distributions among Canadian companies. Further, over the past 15 years, its dividend has grown at a CAGR of 5%.
The financial services company’s diverse revenue sources, growing loans and deposit portfolio, solid credit performance, and improving efficiency will continue to drive its earnings and dividend payouts. Bank of Montreal sees high single-digit earnings growth over the medium term. This will support its future dividend increases. Additionally, it offers an attractive yield of 4.5%.
