Investing in dividend stocks involves risks inherent to the stock market. Thus, no Canadian dividend stock is 100% safe. However, certain TSX stocks stand out due to their robust fundamentals, consistent earnings growth, and sustainable dividend payments, offering a relatively stable source of income. Holding such stocks not only provides regular income but also enhances the stability of your investment portfolio.
Against this backdrop, here are three safe dividend stocks I think everyone should own.
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TC Energy
TC Energy (TSX: TRP) is one of the top TSX stocks for earning steady passive income. The energy infrastructure company has raised its dividend for 25 consecutive years, which shows its ability to generate resilient earnings and cash flows across commodity and economic cycles. Moreover, the company plans to grow its dividend by 3-5% annually in the long run and offers a healthy yield of over 5%.
TC Energy’s payouts are well-protected through its high-quality assets. It is worth noting that about 97% of its comparable earnings are derived from take-or-pay contracts or regulated cost-of-service frameworks. This contractual structure makes it relatively less exposed to commodity price fluctuations, adding stability to its financials, boosting cash flows, and driving dividend payouts.
The energy company will continue to benefit from its highly regulated and contracted assets, higher system utilization, and a solid pipeline of secured capital projects. Moreover, expansion in opportunities in nuclear power and other energy solutions provides multiple avenues for future growth.
Bank of Montreal
Leading Canadian banking stocks are popular for paying regular dividends for decades, making them safe investment bets. Among the largest banking stocks, investors can rely on Bank of Montreal (TSX: BMO) for its longest streak of dividend payments.
The financial services giant has paid dividends for 196 consecutive years. Moreover, BMO has rewarded its shareholders with increased dividend distributions, growing its annual payouts at a compound annual growth rate (CAGR) of 5.4%. It offers a secured yield of 4.9%.
BMO’s diversified revenue streams and exposure to high-growth banking areas like wealth management will drive its financials. Moreover, its ability to grow its loan and deposit base, solid credit performance, and improving efficiency will likely drive its bottom line and dividends.
Fortis
Fortis (TSX: FTS) is another Canadian dividend stock to earn safe and consistent income in all market conditions. This electric utility company owns a diversified portfolio of regulated assets, which enables it to generate resilient earnings and predictable cash flows in all economic cycles, driving higher dividend distributions.
Thanks to its growing earnings and robust cash flows, the utility giant has consistently raised its distributions for 51 consecutive years. In addition, Fortis stock offers a dividend yield of 3.7%.
Fortis is well-positioned to continue paying higher dividends in the coming years. The company’s $26 billion capital plan will likely expand its rate base and generate low-risk earnings, driving higher dividends. Fortis’s management forecasts its rate base to grow at a CAGR of 6.5% through 2029 and expects its dividends to increase annually by 4-6% during the same period. Further, its solid transmission investment pipeline and energy transition opportunities bode well for future growth and will likely support its payouts.
