When it comes to buying dividend stocks and building a portfolio that can generate passive income for life, you’ll want to consider a few main factors.
First off, you want to find the best and most reliable businesses that consistently return cash to investors. These are companies that are well-established and have been generating a profit for years, allowing them to return some of those profits to investors.
In addition, you want to make sure that the dividends these stocks are paying are not just sustainable, but they have the potential to continue growing year over year.
While most stocks across the board can struggle in worsening economic environments, and it’s not uncommon to see dividends get cut ahead of a recession, there are a select few high-quality Canadian stocks that have been increasing their dividends every single year for decades now.
So, if you’ve got some cash on the sidelines that you’re looking to put to work, here are three top dividend stocks to buy now that can generate you passive income for life.
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Two of the best Canadian dividend stocks to buy and hold forever
If you’re looking to buy stocks that can generate passive income for life, there’s no question that two of the very best are Fortis (TSX: FTS) and Enbridge (TSX: ENB).
Both Fortis and Enbridge are high-quality and reliable, recession-resistant companies due largely to the essential operations they provide.
A dividend king
For example, as a utility stock, Fortis is one of the lowest-risk businesses you can invest in for several reasons. First, Fortis’ services, such as access to natural gas and electricity, are essential. That means the demand for these services hardly ever fluctuates, whether the economy is booming or facing significant headwinds.
In addition, though, Fortis’ operations are also diversified well geographically, and the industry is regulated by the government. That makes Fortis’ future revenue and earnings growth highly predictable.
And because its future growth is predictable, it allows Fortis to continue increasing the dividend each year, while ensuring that it remains sustainable.
This business model has allowed Fortis to increase its dividend every year for half a century now, showing how well it can perform no matter what the economic environment.
So, if you’re looking for dividend stocks that can generate you significant passive income for life, Fortis’ yield not only sits at roughly 3.7% today, but it’s constantly being increased each year.
A cash flow cow
Meanwhile, Enbridge has a number of similarities to Fortis. The energy infrastructure stock is well diversified and provides essential services in the North American economy, ensuring that it is constantly growing the cash flow it generates.
This ever-growing cash flow allows Enbridge to continue increasing how much capital it returns to investors, while still retaining enough funds left over to invest in growing the business and ensuring more future dividend growth down the road.
This business model has allowed Enbridge to increase its dividend every year for three straight decades now. And if you’re looking to buy this high-quality Canadian dividend stock today, you can lock in a yield of roughly 5.9%.
A top real estate stock for passive income seekers
In addition to reliable, recession-resistant infrastructure stocks like Fortis and Enbridge, another top Canadian dividend stock for passive income seekers to buy now is CT REIT (TSX: CRT.UN).
There are plenty of dividend stocks in the real estate sector, but none as attractive as CT REIT. It’s one of the few real estate stocks that consistently increases its payout every year. Furthermore, in addition to the dividend growth, it offers one of the highest yields in the sector, currently at 6.1%.
The reason CT REIT is so reliable is its relationship with Canadian Tire, one of the best-known retailers in Canada. Canadian Tire is the majority owner of CT REIT, but also its largest tenant, accounting for roughly 90% of its income.
Therefore, given its reliance on Canadian Tire, CT REIT has been able to increase its distribution every year since going public, and continues to keep its payout ratio manageable.
So, if you’re looking for dividend stocks that can generate you growing passive income for life, there’s no question CT REIT is one of the best to consider.
