Buying and holding top dividend stocks is a smart way to maximize your portfolio’s income-generating capabilities amid volatility. Investors should look for Canadian stocks with fundamentally strong businesses and a solid payout history to earn regular income. So, if you’ve got $5,000, here are five income stocks to buy and hold forever.
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Income stock #1
Enbridge (TSX:ENB) is one of the top income stocks known for its solid payout history and well-protected yield. This integrated energy infrastructure company has paid dividends for about 70 years and increased it for 30 consecutive years. It also offers an attractive yield of 5.8%.
Enbridge is well-positioned to distribute higher dividends in the future. Its diversified revenue base, long-term contracts, regulated cost-of-service tolling frameworks, and high system utilization will enable the energy infrastructure giant to deliver solid earnings and distributable cash flows (DCF), which will drive its payouts 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 will likely grow in line with DCF per share, adding visibility over its distributions.
Income stock #2
TC Energy (TSX:TRP) is another compelling income stock from the energy sector. The energy infrastructure company has raised its dividend for 25 consecutive years and offers a high yield of about 4.9%. Moreover, it plans to grow its dividend by 3-5% annually in the long run, reflecting its ability to generate substantial earnings and resilient cash flows.
It is worth noting that TC Energy generates 97% of its comparable earnings from regulated cost-of-service frameworks or take-or-pay contracts, which reduces its exposure to commodity price fluctuations. It also benefits from higher system utilization, multi-billion secured capital projects, and a robust balance sheet, which will continue to drive its cash flows and dividend payouts.
Income stock #3
Fortis (TSX:FTS) is a must-have income stock to buy and hold forever. This electric utility giant has consistently paid higher dividends for 51 years. Fortis’s solid dividend distribution is backed by its diversified portfolio of regulated assets, which enables it to generate higher earnings and predictable cash flows. Further, the company’s defensive business model and growing rate base support its payouts. Fortis stock currently offers a decent dividend yield of 3.7%.
Fortis’s management expects its dividends to grow by 4-6% annually through 2029. The company’s secured capital plan and expanding rate base will likely generate low-risk earnings, driving higher dividends. In addition, its solid transmission investment pipeline and growing opportunities in energy transition bode well for future growth.
Income stock #4
Toronto-Dominion (TSX:TD) is another solid Canadian dividend stock for worry-free income. This leading Canadian bank has regularly paid dividends for 167 consecutive years. Moreover, this financial services company has grown dividends at a compound annual growth rate (CAGR) of 10% since 1998, the highest growth among its peers. Besides solid dividend growth, the bank has a sustainable payout ratio of 40-50% and offers a healthy yield of over 4.8%.
Toronto-Dominion’s diversified revenue streams and ability to expand its loan and deposit base drive its top line. Further, its steady credit performance and operating efficiency cushion its bottom line, supporting higher dividend payments. Toronto-Dominion Bank’s solid balance sheet and accretive acquisitions will also accelerate its growth, supporting higher payouts.
Income stock #5
Brookfield Renewable Partners (TSX:BEP.UN) is another reliable stock for income investors. The company, which owns and operates renewable power assets, has consistently raised its dividends at a CAGR of 5% in the last 14 years. Moreover, it offers a high yield of about 6.7%.
The company plans to increase future dividends at a mid- to high-single-digit rate. Its highly diversified portfolio of renewable energy assets, large installed capacity, and long-term, inflation-linked contracts position it well to generate solid cash flows, which will enable it to raise its future dividends. Brookfield Renewable Partners will also benefit from strategic acquisitions and the growing demand for clean energy. Furthermore, the company’s extensive development pipeline and strong liquidity augur well for growth.
