Although the Canadian equity markets have recovered from this month’s lows, the ongoing trade war and its impact on global growth are causes for concern. In this uncertain outlook, investors can accumulate quality dividend stocks to earn stable passive income while strengthening their portfolios. Against this backdrop, let’s look at three top dividend stocks that have consistently raised their dividends, indicating their healthy financials and cash flows.
Fortis
Fortis (TSX:FTS) is one of the Canadian companies with an extended history of raising dividends uninterruptedly. The electric and natural gas utility company has raised its dividends for 51 years and currently offers a healthy dividend yield of 3.9%. With around 93% of its assets engaged in the low-risk transmission and distribution business and 99% regulated assets, the company’s financials are immune to economic cycles. Thus, the energy firm can generate reliable cash flows and consistently raise dividends. Moreover, FTS stock has delivered over 635% returns in the last 20 years at an annualized rate of 10.5%, outperforming the broader equity markets.
Meanwhile, Fortis continues to expand its rate base with a $26 billion capital investment plan, which would span from 2025 to 2029. It will allocate 77% of these investments to smaller projects and 23% to major capital projects. With the utility company planning to meet a significant amount of these investments through the cash generated from its operations and dividend reinvestments, these capital investments will not severely hurt its financial position. Further, the company’s improving operating efficiency and falling interest rates could boost its profitability in the coming quarters. Based on such healthy growth prospects, Fortis’s management expects to raise its dividend by 4–6% annually through 2029.
Enbridge
Second on my list would be Enbridge (TSX:ENB), which has raised its dividends uninterruptedly for 30 years. The company operates a midstream energy business under a tolling framework and long-term take-or-pay contracts. Besides, it operates low-risk utility assets and sells the power generated from its renewable energy assets through long-term PPAs (power purchase agreements), generating stable and predictable cash flows and raising dividends consistently.
The Calgary-based energy infrastructure company continues to grow its asset base with its $29 billion secured capital program and hopes to put $23 billion of assets into service by 2027. Also, it acquired three utility assets in the United States last year, which could boost its cash flows. So, its growth prospects look healthy. The company’s management has projected its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) to grow at a 7–9% CAGR (compound annual growth rate) through 2026 and hopes to raise its dividends at an annualized rate of 3%. Meanwhile, ENB stock’s forward dividend yield stands at a juicy 5.9% as of the March 26 closing price, making it an excellent buy.
Canadian Natural Resources
My final pick would be Canadian Natural Resources (TSX:CNQ), which has raised its dividends at an annualized rate of 21% for the last 25 years. The oil and natural gas-producing company enjoys a lower breakeven point due to its large, low-risk, high-value reserves and effective and efficient operations, thus generating healthy free cash flows. These reliable cash flows have allowed the company to reward its shareholders through share repurchases and consistent dividend growth.
Moreover, CNQ plans to invest around $6.2 billion this year to strengthen its production capabilities, including drilling 279 crude oil wells and 361 conventional E&P (exploration and production) wells. These growth initiatives could boost its financials, allowing it to continue its dividend growth. Also, it currently offers a healthy dividend yield of 5% and trades at an attractive NTM (next 12 months) price-to-earnings multiple of 12, making it an attractive buy.
