Consistent dividend growth indicates a company’s solid fundaments and healthy cash flows. Given their consistent dividend payouts, these companies are less susceptible to market volatility, thus stabilizing investors’ portfolios. Moreover, investors can reinvest the payouts to earn superior returns in the long term. With the equity markets turning volatile over the last few weeks, investors could look at accumulating quality dividend stocks to build wealth over the long term. Against this backdrop, here are my three top picks.
Enbridge
Enbridge (TSX:ENB) is my top dividend pick due to its low-risk midstream energy business, consistent dividend growth, high yield, and healthy growth prospects. The company transports oil and natural gas across North America through the toll framework and long-term take-or-pay contracts, thus shielding its financials from commodity price fluctuations and market volatility. These stable financials and cash flows have allowed ENB to pay dividends for 70 years. Besides, the energy stock has also increased quarterly dividends for 30 consecutive years and currently offers a forward dividend yield of 6.1%.
Moreover, Enbridge’s expanding asset base as a result of its capital investments could continue to drive its financials. The company plans to put around $23 billion of assets into service over the next three years. Besides, it has recently acquired three natural gas utility assets for $19 billion, strengthening its cash flows. Amid these growth prospects, the company expects its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) to grow at a 7–9% CAGR (compound annual growth rate) through 2026 while supporting yearly dividend growth of around 3%.
Canadian Natural Resources
Another dividend stock I am bullish on is Canadian Natural Resources (TSX:CNQ), which operates a diversified energy asset portfolio in North America, the North Sea, and Offshore Africa. The company delivered a record average annual production of 1.4 million barrels of oil equivalent per day last year, an increase of 2% from the previous year. Growth in the production of both natural gas and crude oil and natural gas liquids boosted its production.
However, the company’s adjusted net income from operations declined by 13% to $7.4 billion amid lower commodity prices. Its adjusted fund flows also fell 2.7% to $14.9 billion. Meanwhile, the Calgary-based energy company has continued rewarding its shareholders by paying $4.4 billion in dividends and repurchasing shares worth $2.7 billion. Moreover, the company plans to invest around $6.2 billion this year, strengthening its production capacity.
Amid these growth initiatives, CNQ’s management expects its total average production in 2025 to grow by around 12%, thus supporting its financial growth and future dividend payouts. Moreover, it has an impressive record of raising dividends for 25 consecutive years at an annualized rate of 21%. It currently offers a forward dividend yield of 5.3% and trades at an attractive NTM (next 12 months) price-to-earnings multiple of 11.1, making it an excellent buy.
Telus
Although the telecommunication sector has been under pressure over the last few years, I have chosen Telus (TSX:T) as my final pick due to its healthy cash flows and impressive record of rewarding its shareholders with share repurchases and dividend payouts. The company enjoys healthy cash flows due to its recurring revenue streams and expanding customer base.
The telco added 1.2 million customers last year, marking a third consecutive year of above one million customer additions. Its expanding 5G and broadband services and increased demand for its bundled services have supported its customer base expansion. Moreover, its 2024 revenue and adjusted net income grew by 1.3% and 12.8%, respectively. Also, free cash flows increased by 12% to $2 billion, thus supporting its dividend payouts. Telus has also rewarded its shareholders by raising its dividends 27 times since May 2011 and currently offers a juicy forward dividend yield of 7.5%.
Meanwhile, the demand for telecommunication services is growing amid technological advancements and growth in remote working and learning. Also, Telus has planned to invest $2.5 billion this year to strengthen its 5G and fibre network, which could support its customer base expansion, financial growth, and future dividend payouts.
