The Bank of Canada has cut interest rates seven times since June last year, lowering its benchmark interest rate by 275 basis points to 2.75%. Moreover, economists are predicting two more 25-basis-point interest rate cuts this year amid easing inflation and a slowdown in economic activities due to trade tensions and weaker global demand. In this low-interest-rate environment, investors could look to accumulate the following three quality dividend stocks to earn a stable passive income.
Image source: Getty Images
Enbridge
Given its stable cash flows, consistent dividend growth, and healthy growth prospects, I have chosen Enbridge (TSX:ENB) as my first pick. The company earns stable and reliable cash flows through its regulated midstream energy business, low-risk natural gas utility assets, and power-purchase agreement-backed renewable energy facilities. These solid cash flows have allowed the energy infrastructure company to pay dividends for 70 years. It has also raised its dividends at an annualized rate of 9% since 1995 and currently offers a healthy forward dividend yield of 6%.
Moreover, Enbridge is expanding its asset base through $9–$10 billion in annual capital investments. The company’s acquisition of three natural gas assets in the United States could boost its cash flows in the coming quarters. Given its high-quality, low-risk cash flow growth prospects, I expect Enbridge to continue paying dividends at a healthier rate, making it an ideal buy for income-seeking investors.
Bank of Nova Scotia
Bank of Nova Scotia (TSX:BNS) is another top Canadian stock with an impressive record of uninterrupted dividend payments since 1833. The company’s diversified revenue model delivers reliable cash flows, supporting its consistent dividend payout. It has also raised its dividends at an annualized rate of 5% for the previous 10 years and offers a juicy forward dividend yield of 5.9% as of the May 19 closing price.
Moreover, the financial services company focuses on consolidating its international operations to boost profitability while expanding its presence in North America. It has handed over its retail banking operations in Panama, Costa Rica, and Colombia to Davivienda for a 20% stake in the combined entity. This transaction could improve BNS’s operating metrics.
Besides, the company has acquired a 14.9% stake in KeyCorp, which could contribute $62 million to its second-quarter earnings of fiscal 2025. Also, the falling interest rates could boost economic activity, thus driving credit demand and expanding the company’s addressable market. Considering all these factors, I expect BNS to continue paying dividends at a healthier rate in the coming years.
Telus
Although the Canadian telecom sector has been under pressure over the last few years, I have chosen Telus (TSX:T) as my final pick due to its reliable cash flows, consistent dividend payments, and share repurchases. The company earns substantial revenue from its recurring sources, thus supporting its cash flows and consistent dividend growth. Since 2011, the Vancouver-based telco has raised its dividends 27 times and offers a juicy forward dividend yield of 7.6%.
Moreover, Telus’s expanding 5G and broadband infrastructure and compelling bundled offerings could continue to drive its customer base and financials. Also, its technology-centric growth businesses, Telus Health and Telus Agriculture & Consumer Goods, continue to grow at an impressive rate driven by strategic investments, expanding sales channels, and cost optimization initiatives. So, its growth prospects look healthy. Besides, Telus’s management expects to raise its dividend by 3–8% annually through 2028, making it an attractive buy.
