Investors looking to generate significant passive income for the next 20 years could consider Canadian dividend stocks with high yields. However, the key to long-term, worry-free passive income is focusing on companies with solid fundamentals, a proven track record of resilience, steady cash flows, and profitable growth. These are the kinds of stocks that can weather economic challenges and continue rewarding investors with consistent dividends.
Against this background, here are two high-yield Canadian stocks investors can buy and hold for the next 20 years. These stocks offer sustainable payouts in addition to high yields.
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Enbridge stock
Enbridge (TSX: ENB) is a no-brainer Canadian dividend stock to buy and hold for the next 20 years. Its high yield of about 6%, sustainable payouts, and a solid history of consistent dividend growth make Enbridge a perfect investment to generate significant passive income.
Enbridge has rewarded its shareholders with annual dividend increases for three consecutive decades. Moreover, the company’s steady earnings and strong distributable cash flows (DCF) ensure that this trend will likely continue well into the future.
Notably, Enbridge’s highly diversified revenue base drives its cash flows. Moreover, Enbridge’s core assets operate under long-term contracts, cost-of-service tolling agreements, power-purchase agreements (PPAs), and low-risk commercial arrangements. These structures allow Enbridge to generate low-risk, resilient cash flows and keep it largely insulated from volatile commodity prices and economic swings.
Looking ahead, several growth drivers will fuel Enbridge’s future performance. Increased demand for its liquids pipelines infrastructure and opportunities in the natural gas transmission business, spurred by new power generation projects, industrial expansion, and data centre growth, will support the company’s long-term earnings. Additionally, Enbridge continues to invest in various renewable energy initiatives, further diversifying its portfolio and strengthening its position in the green energy space.
Management is optimistic about the future, forecasting mid-single-digit growth in DCF per share over the long term. A growing DCF will support higher dividend payouts. In short, Enbridge is a reliable income stock to buy and hold for decades.
Canadian Utilities stock
Investors planning to start a reliable passive income stream for decades could consider adding utility companies to the TSX. Utility companies are known for their stable operations and steady dividend payments. Thanks to their regulated assets, these businesses generate predictable cash flows, even when broader market conditions are volatile.
One of the top names in this space is Canadian Utilities (TSX: CU). It has the record for the longest dividend-growth streak on the TSX, having increased its distribution for an impressive 52 consecutive years. Moreover, it offers a generous dividend yield of about 5%, making it a compelling pick for income-focused investors.
Its portfolio of regulated and long-term contracted assets ensures consistent earnings, driving higher dividend payments. Moreover, Canadian Utilities is expanding its regulated asset base, strengthening its earnings power over time.
Beyond its core utility operations, Canadian Utilities is also enhancing its energy infrastructure portfolio, positioning itself well for sustainable, long-term growth.
Overall, this Canadian utility giant’s regulated assets, low-risk earnings base, focus on rewarding shareholders with higher dividend payments, and high yield make it an attractive income stock.
