The broader market index is witnessing volatility amid macroeconomic uncertainty. Regardless of the short-term headwinds, investing in top-quality dividend stocks can help you earn stress-free passive income.
Against this backdrop, here are three Canadian stocks that are my top picks for steady passive income. These companies have consistently paid and increased their distributions for decades, regardless of the economic situation. Moreover, they have solid fundamentals with resilient payouts, making them reliable investments for generating stress-free passive income.
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Telus
Telus (TSX:T) is one of my top picks for stress-free passive income. This Canadian communication giant has a solid track record of dividend growth, which is led by its ability to deliver profitable growth. Since 2011, this wireless service provider has increased its dividend 27 times. Moreover, it returned over $21 billion in dividends since 2004.
Thanks to its ability to profitably grow its user base, keep customer churn low, and drive average margin per user, Telus will continue to grow its earnings and dividends in the coming years. Under its sustainable multi-year dividend-growth program, the telecom giant is likely to increase its annual dividend by 7-10% in 2025. In addition to higher dividend growth, the stock offers a lucrative yield of 7.5%.
Also, Telus is investing in its network and focusing on enhancing coverage through spectrum acquisitions and infrastructure upgrades, which will augur well for growth. The expansion of its 5G and PureFibre networks will further strengthen its market positioning, driving subscriber growth and revenue. Also, Telus’s diversification into digital services will accelerate its revenue growth and support its future payouts.
TC Energy
Investors seeking stress-free passive income should not ignore TC Energy (TSX:TRP). The energy infrastructure company has already raised its dividend for 25 consecutive years and plans to grow it by 3-5% annually in the long run. The energy company’s ability to generate resilient earnings and cash flows drives its payouts, making it a compelling income stock. Moreover, it offers a secured yield of about 5%.
It is worth noting that TC Energy’s payouts are well-protected. The company’s financials are secured, as it derives 97% of its comparable earnings from take-or-pay contracts or regulated cost-of-service frameworks. This means it has relatively less exposure to commodity price fluctuations, which gives stability to its financials, boosts cash flows, and drives dividend payouts.
This energy infrastructure company will likely benefit from its highly regulated and contracted asset base, higher system utilization, multi-billion secured capital projects, and a robust balance sheet.
Furthermore, its focus on productivity savings will drive higher earnings and payouts. In addition, TC Energy’s diverse portfolio and opportunities in natural gas, nuclear, and other power and energy solutions will further drive its financials, supporting its cash flows and payouts.
Fortis
Fortis (TSX:FTS) is my other top pick for worry-free income in all market conditions. This electric utility company has a diversified portfolio of regulated assets, which enables it to generate resilient earnings and predictable cash flows, driving higher dividends. Further, its defensive business model and growing rate base support its payouts.
The utility giant has consistently delivered higher dividends in all economic cycles thanks to its growing earnings and solid cash flows. Fortis has raised its distributions for 51 consecutive years and offers a dividend yield of 3.8%.
Fortis is likely to continue paying higher dividends in the coming years. The company’s $26 billion capital plan will likely expand its rate base at a compound annual growth rate of 6.5% through 2029. The growing rate base will likely generate low-risk earnings, driving higher dividends.
Fortis’s management expects its dividends to grow by 4-6% annually through 2029. Further, its solid transmission investment pipeline and energy transition opportunities bode well for future growth and will likely support its payouts.
