Many companies listed on the TSX offer dividends, but only a select group stands out as true dividend champions. These are the rare few that have never cut their payouts, reflecting strong fundamentals and focus on enhancing shareholder value.
Typically, they are large-cap Canadian firms with well-established business models that have stood the test of time. Their ability to generate reliable revenue streams, even in turbulent market conditions, allows them to steadily grow their earnings and free cash flow, supporting their payouts.
Moreover, these fundamentally strong companies have consistently increased their dividends year after year and have a sustainable payout ratio.
In this context, here are two Canadian stocks that have earned the label of dividend champions. These companies have never once cut their payouts, even during economic downturns, making them top stocks to generate passive income.
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Fortis
Fortis (TSX:FTS) is a top Canadian dividend stock that has never cut its payouts. The electric utility company is known for over five decades of uninterrupted dividend growth. This blue-chip generates most of its earnings from a diversified portfolio of rate-regulated utility assets, which are largely shielded from economic fluctuations. Its focus on energy transmission and distribution lowers operational risk and ensures steady, predictable cash flows, supporting its reliable dividend payments.
Fortis offers a quarterly dividend of $0.615 per share, translating to a yield of around 3.8%. While this may not be high, the real appeal lies in its sustainability and the consistent growth behind it.
Thanks to its multi-billion-dollar capital plan, Fortis’s rate base is expected to grow at a compound annual growth rate (CAGR) of 6.5%. This will expand the utility giant’s low-risk earnings base and drive dividends higher. Fortis is projecting a 4-6% annual dividend increase through 2029. Adding to the company’s long-term appeal is the increasing demand for electricity from sectors such as data centres, manufacturing, and mining. These energy-intensive industries provide more runway for growth.
Enbridge
Enbridge (TSX:ENB) is another top Canadian stock that has never cut its dividend payouts. The energy transportation and distribution company has uninterruptedly increased its dividend for three decades. Moreover, its payouts have survived every market crash since 1995. Besides resilient dividend payments, Enbridge stock offers a high yield of about 6% and targets a sustainable payout ratio of 60% to 70% of its distributable cash flow (DCF).
Enbridge’s extensive network of pipelines and energy infrastructure connects major supply and demand hubs and witnesses high utilization. Moreover, the company’s operations benefit from long-term contracts, regulated rate structures, and power-purchase agreements. These commercial arrangements limit exposure to market volatility and help ensure a steady stream of revenue.
Looking ahead, Enbridge is poised to grow its low-risk earnings base even further. Its recent acquisition of three utilities diversifies its revenue and enhances its exposure to regulated businesses. At the same time, a surge in electricity demand creates new opportunities for growth. Enbridge is well-positioned to benefit from this trend, supported by a $28 billion secured capital growth backlog and a pipeline of development projects nearing completion.
With earnings expected to grow at a mid-single-digit rate in the coming years, Enbridge appears well-positioned to continue increasing its dividend.
