The best dividend stocks can generate worry-free passive income for decades. The top Canadian picks in this space aren’t just about reliable yields. They are fundamentally strong companies with stable operations and growing earnings. These businesses have proven their resilience over time, making them reliable anchors in any portfolio.
Against this background, here are three of the best dividend stocks on the TSX that, in my opinion, stand out right now for their income potential and ability to grow their dividends.
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Best dividend stock #1
Canadian Utilities (TSX:CU) is one of the best dividend stocks in Canada for its unmatched 52-year dividend-growth history. This utility company has the longest dividend-growth streak among all publicly traded companies in Canada. Moreover, it is poised to increase its payouts in the coming years due to its regulated and long-term contracted asset base that generates low-risk earnings. Furthermore, it offers a high yield of about 4.7%.
Canadian Utilities plans to invest between $4.6 billion and $5 billion from 2024 to 2026 to grow its regulated utilities business. By expanding its regulated asset base, the company expects to strengthen its earnings and cash flow, which in turn will support higher dividend payouts. In addition, its contracted infrastructure assets are set to drive further growth, helping the company maintain and increase its dividends over time.
Best dividend stock #2
Enbridge (TSX:ENB) is a no-brainer stock for investors seeking steady dividend income for decades. It operates one of the most extensive liquid pipeline networks in North America, strategically connecting key supply and demand hubs. Thus, it witnesses high utilization for its energy infrastructure assets, supporting its financials.
Moreover, its diversified asset base, including low-risk utility businesses, long-term contracts, and regulated take-or-pay agreements, consistently drives its distributable cash flow (DCF) and supports its dividend payments.
Thanks to its resilient earnings and DCF, Enbridge increased its dividend for three decades. It maintains a sustainable payout ratio of 60–70% of its DCF, providing confidence that its dividend is durable. Enbridge’s management is guiding for earnings and DCF per share to increase by about 5% annually in the long term. This growth will translate into continued dividend increases, with management targeting a mid-single-digit annual dividend growth rate in line with DCF expansion.
Best dividend stock #3
Leading Canadian banks are among the best dividend payers. These financial services giants have paid dividends for over a century, making them reliable bets for generating regular income for decades.
Among the top banks, Toronto-Dominion Bank (TSX:TD) shines for its solid payout history and high dividend growth rate. TD has paid out dividends for about 167 consecutive years, which reflects the resilience of its earnings and its commitment to reward shareholders. Moreover, since 1998, the bank has increased its dividend at a compound annual growth rate of 10%, outpacing its peers in the sector. It maintains a conservative payout ratio, suggesting that its dividend distributions are sustainable in the future.
TD’s diversified business model, combined with consistent growth in its loan and deposit base, provides a solid foundation for earnings growth. Its focus on operational efficiency further enhances its profitability. In addition, the bank continues to pursue strategic acquisitions that strengthen its position and expand its earnings potential.
With a solid balance sheet and operating efficiency, Toronto-Dominion Bank is well-positioned to continue delivering value to shareholders.
