Buying and holding dividend stocks is a smart way to stabilize your portfolio while generating a steady income stream. However, investors should look for stocks supported by fundamentally strong businesses with a history of consistently increasing their dividends regardless of the market conditions. These stocks will likely enhance their shareholders’ value in the coming years and deliver decent capital gains.
Against this background, here are five Canadian dividend stocks everyone should own.
Source: Getty Images
Dividend stock #1
Canadian Utilities (TSX: CU) is one of the top dividend stocks everyone should own. The utility company is known for its defensive business and a solid history of dividend growth. For instance, its regulated operations and predictable cash flows have enabled it to increase its dividends for 52 consecutive years, the longest streak of any publicly traded company in Canada. Moreover, it offers a high yield of 5.1%.
Looking ahead, Canadian Utilities is well-positioned to continue its dividend growth. Its ongoing investments in its regulated assets will expand its rate base, enhancing its ability to generate strong cash flows. This, in turn, will support future dividend increases.
Dividend stock #2
Enbridge (TSX: ENB) stock is a no-brainer for investors seeking worry-free passive income. This integrated energy infrastructure company has paid dividends for about 70 years and increased its dividend for an impressive 30 consecutive years. While Enbridge has a solid record of returning significant cash to its shareholders, it offers an attractive yield of 6.2%.
Enbridge’s diversified revenue base, high system utilization, long-term contracts, and regulated cost-of-service tolling frameworks will drive its earnings and distributable cash flows (DCF) per share across commodity and economic cycles. In the long run, its DCF per share is forecasted to increase at a mid-single-digit rate. Moreover, its dividend is likely to grow in line with its DCF per share.
Dividend stock #3
Bank of Montreal (TSX: BMO) is another Canadian dividend stock everyone should own. This leading Canadian bank has regularly paid dividends for 196 consecutive years. While Bank of Montreal has the longest streak of dividend payments by any publicly traded Canadian company, it has consistently rewarded its shareholders with higher annual payouts. For instance, the financial services company’s dividend grew at a compound annual growth rate (CAGR) of 5.4% in the last 15 years.
BMO’s diversified revenue streams, including high‐return wealth business and ability to expand its loan and deposit base, drive its top line. Further, solid credit performance and operating efficiency cushion its bottom line, supporting higher dividend payments. While BMO is well-positioned to return higher cash, it offers a compelling yield of 4.6%.
Dividend stock #4
Telus (TSX: T) is a solid dividend stock to add to your portfolio. The Canadian communication giant is known for rewarding its shareholders with consistent dividend growth. Its ability to consistently generate profitable growth has enabled Telus to increase its dividend 27 times since 2011. Moreover, it returned over $21 billion in dividends since 2004. While Telus is poised to grow its dividends in the coming years, it offers a lucrative yield of 7.4%.
Its ability to expand its user base, lower churn, and drive average margin per user augurs well for future earnings and dividend growth. Moreover, its investments in 5G and PureFibre networks further strengthen its competitive positioning. Telus has also diversified into digital services, which will accelerate its growth and support its payouts.
Dividend stock #5
TC Energy (TSX: TRP) is a reliable dividend stock everyone should own. The energy infrastructure company generates 97% of its comparable earnings from regulated cost-of-service frameworks or take-or-pay contracts. This structure reduces its exposure to commodity price fluctuations and drives its cash flows and dividend payouts.
TC Energy has increased its dividend for 25 consecutive years and plans to grow its dividend by 3-5% annually in the long run. Its ability to generate resilient cash flows and visibility over future payouts make it a compelling income stock. Moreover, it offers a high yield of 5.1%.
