Canadian dividend stocks are a safe investment to hold if the stock market corrects in 2025. Even though your stock might decline, you can still collect a steady stream of tangible cash dividend income.
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Dividends can help offset stock market volatility
The dividend income can offset some of the pain from a selloff. Good-quality companies are generally quick to bounce back after a market pullback. So, it is crucial to focus on dividend stocks that are well-managed, economically resilient, and have strong balance sheets.
Some of the best Canadian dividend stocks are those that regularly increase their dividends. As their income and cash flows increase, they also grow their annual dividend rate. If you are looking for dividend growth stocks to hold right now, here are three set to boost their dividends in 2025.
Canada’s largest energy producer for growing dividends
Canadian Natural Resources (TSX: CNQ) is a Canadian dividend growth legend. It has grown its dividend by a 21% compounded annual growth rate (CAGR) for 25 consecutive years.
The company has built out and acquired a massive energy production empire in Canada. It operates with incredible efficiency and has an industry-leading low cost of production. It can still generate free cash flow even if oil were to drop below US$40 per barrel.
Canadian Natural just raised its dividend by 7% in October of 2024. If it can continue to pay down debt aggressively in 2025, shareholders are likely to get another boost as it looks to return more cash to shareholders. It yields 5.5% today.
A Canadian utility stock with decades of dividend growth
Speaking of dividend legends, Fortis (TSX: FTS) is definitely one of them. It has increased its dividend for 51 consecutive years! That track record of dividend growth is not about to stop any time soon.
It is a very well-managed transmission and distribution utility across North America. Power demand is ever-increasing due to population growth, data centre demand, and climate change.
Consequently, Fortis has a seemingly endless opportunity to continue expanding the grid and growing its infrastructure. As it invests, it plans to grow by about 6% per annum. That should help lead to further mid-single-digit dividend growth for this Canadian stock. It yields 3.85% now.
A Canadian software stock spewing rising dividends
Enghouse Systems (TSX: ENGH) is a software stock with a strong dividend record. Its dividend has risen by an 18% compounded annual rate over the past 10 years. Its current annual dividend of $1.04 per share is nearly 20 times what it was in 2008!
Enghouse owns asset and communication software businesses around the world. These are not super exciting businesses. They tend to have relatively low growth. However, they generate a lot of spare cash.
Enghouse’s cash balance has grown significantly over the years. It is sitting on over $275 million of net cash. It should deploy this into acquisitions. It can afford to be opportunistic, especially as the economy has weakened.
This Canadian stock is likely to increase its dividend by a double-digit rate in 2025. If it can get its mergers and acquisition vehicle rolling, the stock could see attractive upside as well. It yields 4% today.
