Investing in Canada’s smartest dividend stocks can help you generate steady passive income for years without stressing over market swings. These fundamentally strong companies are known for their robust financials and commitment to rewarding shareholders, even when the economy hits a rough patch. That means consistent passive income year after year.
If you’re ready to put $1,000 to work and start building a dependable passive income stream, here are some of the smartest dividend stocks in Canada to buy right now.
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Canadian Natural Resources stock
Canadian Natural Resources (TSX: CNQ) is one of the smartest dividend stocks to consider now. With a solid record of consistent dividend increases and impressive capital growth, this oil and gas giant offers investors a compelling combination of income and long-term value.
Canadian Natural Resources has one of the most impressive dividend growth records in Canada. The energy company has increased its dividend at a compound annual growth rate (CAGR) of 21% for 25 consecutive years. Currently, it offers a dividend yield of 5.4%, making it a compelling income option.
While the growing dividend is a major draw, Canadian Natural Resources has also delivered significant capital appreciation. Over the past five years, the stock has surged by an impressive 370.8%, reflecting a CAGR of 36.3%.
The company’s efficient and diverse production portfolio will support its growth. Canadian Natural Resources benefits from a healthy mix of conventional and synthetic crude oil assets, the latter of which are zero-decline and high-margin. These operations help keep replacement costs low, supporting its earnings and cash flow.
Looking ahead, Canadian Natural Resources is well-positioned to sustain and grow its dividends thanks to its disciplined capital allocation and strong balance sheet. Its vast inventory of undeveloped land, long-life and low-decline assets, and cost-effective projects provides a solid runway for future growth. Opportunistic acquisitions further enhance its potential and will support its payouts.
Fortis stock
Fortis (TSX: FTS) is another smart dividend stock to buy now. This utility company derives the bulk of its earnings from regulated utility operations. This structure provides a strong defensive moat, helping insulate the company from broader market swings and economic uncertainty. Moreover, its focus on core energy transmission and distribution, areas known for their relatively lower risk, adds further predictability to its financial performance.
Thanks to steady earnings and a growing rate base, Fortis has consistently rewarded investors with higher cash. For instance, Fortis has grown its dividend for 51 consecutive years. Besides uninterrupted dividend growth, it offers a decent yield of 3.8% near the current market price.
The company is well-positioned to continue delivering consistent earnings and increasing its dividend, backed by a diversified portfolio of regulated assets across North America and a growing rate base. Fortis anticipates its rate base to grow at a CAGR of 6.5% through 2029. This will enable FTS stock to increase its annual dividend by 4% to 6% through 2029.
It will further benefit from expanding electric transmission infrastructure in the U.S., as well as opportunities for energy transition, modernizing its grids, and capitalizing on growing energy demand.
Bank of Montreal stock
Bank of Montreal (TSX: BMO) is among Canada’s top banking companies and one of the smartest dividend stocks to generate reliable passive income. It has a stellar history of consistent dividend payments. Moreover, it maintains a sustainable payout ratio.
This financial services company has been paying dividends uninterruptedly for 195 years. In addition, the bank has increased its dividend for the past 15 years at a CAGR of more than 5%. Its consistent payouts reflect its ability to generate high-quality earnings and its commitment to rewarding shareholders through steady dividends. Currently, Bank of Montreal offers an annual yield of about 4.2%.
Bank of Montreal’s strong asset quality and operational efficiency support its profitability, ensuring consistent dividend payouts. The bank’s diverse revenue streams, expanding loan and deposit base, and strong credit quality are likely to drive its earnings, enabling it to continue growing its dividends in the coming years.
