Dividend stocks have historically outperformed non-dividend-paying stocks. Supported by their stable and reliable financial performances, these companies provide consistent payouts, thereby allowing investors to earn a stable passive income. Additionally, these companies are less prone to market volatility due to their consistent payouts, thereby stabilizing your portfolio. Against this backdrop, let’s look at my three top dividend stock picks that you can buy to earn consistent payouts for decades.
Enbridge
Enbridge (TSX:ENB) is an ideal dividend stock to have in your portfolio due to its regulated and contracted business, reliable cash flows, consistent dividend hikes, and high yield. The Calgary-based energy infrastructure company generates approximately 98% of its adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) from a regulated framework and long-term take-or-pay contracts. Additionally, the company has minimal exposure to commodity price fluctuations and earns around 80% of its adjusted EBITDA from inflation-indexed assets.
Supported by all these factors, the company’s cash flows have been stable and reliable, allowing it to pay dividends for 70 years. The company’s management has also raised its dividends at a 9% compound annual growth rate (CAGR) since 1995, while currently offering an attractive dividend yield of 6.13%.
Moreover, Enbridge is expanding its asset base through annual capital investments of $9 billion to $10 billion. It has also identified $50 billion of growth opportunities through 2030. Additionally, its healthy liquidity and improving financial position, amid increased contributions from its recent acquisitions, could allow it to continue its dividend growth in the coming years.
Fortis
Fortis (TSX:FTS) is another stock that can be relied upon to earn regular payouts for decades due to its low-risk and regulated utility assets. The company operates regulated utility assets, with 93% of its assets involved in low-risk transmission and distribution of electricity and natural gas. The company has consistently expanded its rate base and improved its operational efficiency, thereby supporting its financial growth and delivering reliable cash flows. Supported by these healthy cash flows, the company has raised its dividends for 51 consecutive years and offers a forward dividend yield of 3.81% as of the June 22nd closing price.
Moreover, Fortis is progressing with its five-year capital investment plan of $26 billion, which would span from 2025 to 2029. These investments could grow its rate base at an annualized rate of 6.5% to $53 billion by 2029. Meanwhile, the company expects to fund 70% of these investments from the cash generated from its operations and dividend-reinvestment plan. Therefore, these investments wouldn’t substantially raise the company’s debt levels and interest expenses, thereby driving its earnings and cash flows. Amid these growth initiatives, Fortis’s management expects to increase its dividends by 4-6% annually through 2029, thereby making it an ideal buy for income-seeking investors.
Canadian Natural Resources
Canadian Natural Resources (TSX:CNQ) is a Canadian oil and natural gas producer that has consistently raised its dividends over the past 25 years at an annualized rate of 21%. Its large, low-risk, high-value reserves, which require lower capital reinvestments, along with effective and efficient operations, have delivered healthy cash flows, thereby allowing it to raise its dividends at a consistently healthier rate. It currently pays a quarterly dividend of $0.5875/share, translating into a forward dividend yield of 5.11% as of the June 22nd closing price.
Besides, CNQ continues to strengthen its production capabilities by investing $6 billion this year. Moreover, the company’s management expects its average production to be between 1,510 and 1,555 thousand barrels of oil equivalent per day (MBOE/d). The midpoint of the guidance represents a 12.5% year-over-year increase. The company has also been strengthening its balance sheet by lowering its leverage. Its financial position also looks healthy, with liquidity of $5.1 billion. Considering all these factors, I believe CNQ could continue paying dividends at a healthier rate.
