Companies that consistently raise their dividends will be financially stable and enjoy healthy cash flows from their solid underlying businesses even during a challenging macro environment. These companies would help you earn a stable passive income and strengthen your portfolios. Against this backdrop, let’s look at my three top picks that have raised their dividends consistently.
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Fortis
Fortis (TSX:FTS) is one of the top Canadian stocks with an impressive record of consistent dividend growth. It operates 10 regulated natural gas and electric utility assets across the United States, Canada, and the Caribbean, serving 3.5 million customers. Its regulated asset base and low-risk utility businesses generate stable and predictable cash flows irrespective of the broader market conditions, allowing it to raise dividends for 51 consecutive years. Also, its expanding rate base, implementing innovative practices to reduce expenses, and adopting cost-efficient programs have driven its financials and stock price. The company has delivered an average annual total shareholders return of 10.3% over the last 20 years, comfortably beating the broader equity markets.
Moreover, Fortis has planned to make a capital investment of $26 billion over the next five years, thus growing its rate base at an annualized rate of 6.5% to $53 billion by 2029. Along with these expansions, favourable rate revisions and improved operating efficiencies will boost the company’s financials in the coming quarters. The company, which operates a capital-intensive business, could also benefit from the falling interest rates. Meanwhile, given its healthy growth prospects, Fortis’s management is confident of raising its dividends by 4-6% annually through 2029, thus making it an excellent buy.
Enbridge
Another Canadian stock that has raised its dividends consistently is Enbridge (TSX:ENB). The energy infrastructure company transports oil and natural gas across North America and is involved in natural gas utility and renewable energy production. With 98% of its cash flows underpinned by cost-of-service tolling frameworks and long-term take-or-pay contracts, its financials are less prone to market volatility, thus generating stable and predictable cash flows. These healthy cash flows have allowed the company to pay dividends uninterruptedly for 69 years and raise its dividends for 30 previous years.
Moreover, Enbridge continues to invest around $8-$9 billion annually, expanding its midstream, utility, and renewable energy asset base. Besides, the company acquired three natural gas utility assets in the United States last year for $19 billion, which could boost its financials and cash flows in the coming quarters. However, these acquisitions raised its net debt-to-EBITDA (earnings before interest, tax, depreciation, and amortization) multiple to five. Meanwhile, the growing contributions from these acquisitions could bring its net debt-to-EBITDA down this year. Given its healthy growth prospects and improving financial position, Enbridge could continue rewarding its shareholders by maintaining its dividend growth.
Canadian Natural Resources
My final pick is Canadian Natural Resources (TSX:CNQ), which has raised its dividends for 26 years at an annualized rate of 21%. The oil and natural gas producer operates large, low-risk, high-value reserves. Given its diversified, balanced asset base and efficient and effective operations, the company enjoys a low breakeven price, thus generating healthy financials and cash flows. These healthy cash flows have allowed it to raise its dividends consistently while its forward dividend yield stands at 4.92%.
Meanwhile, CNQ has planned to invest $6.15 billion this year, strengthening its production capabilities. The management projects its overall production in 2025 to be between 1,510 and 1,555 mboe/d ( thousand barrels of oil equivalent per day), with the midpoint of the guidance representing a 12% increase from 2024 guidance. Organic growth and last year’s acquisitions (the Athabasca Oil Sands Project and Duvernay assets) could boost the company’s production this year. The increased output could continue strengthening its financials, thus supporting its dividend growth.
