A low-cost strategy to begin a passive-income stream is to buy and hold quality dividend growth stocks. Canadian investors should identify a portfolio of companies positioned to grow earnings and cash flows across business cycles, translating to higher payouts over time. In this article, I have identified two such TSX dividend stocks you can buy now with $25,000.
Is the TSX dividend stock a good buy?
Valued at a market cap of $1.2 billion, Bird Construction (TSX:BDT) stock has returned 376% to shareholders since its initial public offering in February 2006. However, if we adjust for dividend reinvestments, cumulative returns are close to 1,230%. Despite these outsized gains, the TSX stock is down 33.5% below all-time highs, allowing you to buy the dip and benefit from a forward yield of 4.1%.
In 2024, it reported revenue of $3.4 billion, up 21% from 2023, adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) of $212.8 million, up 53%, and adjusted EBITDA margins of 6.3%, up 130 basis points.
In the last two years, Bird has focused on diversifying its business and pursuing collaborative contracting structures. This approach has meant that its earnings and operating cash flow improvements have outpaced revenue growth. For instance, free cash flow increased 80% year over year in 2024, with an 80% conversion rate of net income.
The company’s $7.6 billion combined backlog is concentrated in economically resilient sectors with long-term demand drivers, including defence, transportation infrastructure, power (nuclear and hydro), healthcare, and industrial maintenance. Moreover, Bird is well-positioned for defence projects, having completed $1.3 billion in work with Defence Construction Canada over the past decade.
Looking ahead, Bird’s 2025-2027 strategic plan targets organic revenue growth of 10% (±2%), with EBITDA margins reaching 8% by 2027. Management appears confident in managing trade uncertainty, having proactively structured contracts to mitigate tariff risks.
With a healthy balance sheet (0.51 times adjusted net debt to EBITDA), disciplined capital allocation, and expanded capabilities from recent acquisitions, Bird is well-positioned to capitalize on significant infrastructure investment across Canada while continuing to deliver shareholder value through its growing dividend program.
A blue-chip TSX stock to own in 2025
Canadian Natural Resources (TSX:CNQ) is among the largest companies in North America. Despite a challenging macro environment in 2024, CNQ achieved a record annual production of 1.36 million BoE/d (barrels of oil equivalent per day), including over one million barrels of liquids per day.
CNQ’s oil sands mining and upgrading operations were particularly strong, with record production of 472,245 barrels per day for 2024 and industry-leading operating costs of US$22.88 per barrel.
The company’s recent acquisition of additional interests in the Albion Mines and Chevron’s Duvernay assets further strengthens its portfolio. CNQ’s reserve base grew significantly, with total proved reserves reaching 15.2 billion BoE (up 9%), representing a 33-year reserve life index. Approximately 74% of these reserves come from long-life, low-decline, or zero-decline assets.
Financially, CNQ generated $14.9 billion in adjusted funds flow for 2024, returning $7.1 billion to shareholders through dividends and share repurchases. The board approved a 4% dividend increase, marking the 25th consecutive year of dividend growth with a 21% compounded annual growth rate over that period.
The Foolish takeaway
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY |
| Bird Construction | $21.63 | 578 | $0.21 | $121.4 | Quarterly |
| Canadian Natural Resources | $42.59 | 293 | $0.5875 | $172.1 | Quarterly |
Investing a total of $25,000 equally distributed in these two top TSX stocks will help you earn around $1,175 in annual dividends. If the payouts increase by 10% annually, the dividends will double within the next seven years.
