Many stocks on the TSX offer dividends, but only a select few have consistently paid and steadily increased their payouts over time. Furthermore, their strong fundamentals, growing earnings base, and sustainable payouts position them well to maintain their streak of dividend hikes, making them the best dividend stocks in Canada right now.
Against this background, here are three Canadian stocks that, in my opinion, are reliable bets to generate worry-free dividends for decades.
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Dividend stock #1
Canadian Natural Resources (TSX:CNQ) is one of the best Canadian dividend stocks. Its resilient earnings, reliable payouts, and consistent dividend increases make it a compelling investment. This oil and natural gas production company also offers an attractive yield, which adds to its appeal.
Its diversified portfolio of long-life, low-decline assets and efficient capital structure generates substantial free cash flow, even in volatile commodity price environments. Thanks to its high-quality assets and solid cash flows, the energy giant has increased its quarterly dividend for 25 consecutive years. Moreover, Canadian Natural’s dividend has grown at a compound annual growth rate (CAGR) of 21% in this period. It currently offers a sustainable yield of 5.5%.
Canadian Natural has a healthy balance sheet and focuses on reducing net debt. Further, its efficient operations, low-cost structure, and opportunistic acquisitions will drive its free cash flows. In addition, a large inventory of low-capital-intensity projects positions the company well for sustained future growth.
Dividend stock #2
Fortis (TSX:FTS) is one of the most dependable dividend stocks. The utility company has a diversified portfolio of regulated utility assets, which generates low-risk, predictable earnings supporting its quarterly payouts. Notably, 93% of its business is focused on electricity and natural gas transmission and distribution. This structure reduces operational risks and enhances the overall stability of its operations.
Fortis has an impressive payout history, having raised its dividend for 51 consecutive years. The company’s distributions reflect its financial strength and commitment to enhance shareholder value. FTS stock offers a dividend yield of 3.7%, while its payout ratio is well covered by the rate-regulated businesses.
Looking ahead, Fortis is investing heavily in infrastructure. Its five-year capital plan of $26 billion will expand its transmission infrastructure, positioning it well to capitalize on energy transition opportunities and drive long-term growth. The company expects to grow its rate base at a CAGR of 6.5%, which will drive steady earnings growth and support its higher payouts. The utility is targeting annual dividend growth of 4% to 6%, which appears achievable given its growing rate base and rising electricity demand.
Dividend stock #3
Leading Canadian banks are best known for their long-standing history of rewarding shareholders. Among them, Toronto-Dominion Bank (TSX:TD) stands out for its exceptional track record of dividend payments and strong growth.
TD has continuously paid dividends for over 167 years. This demonstrates the durability of its earnings and commitment to rewarding its investors with substantial cash. Moreover, the bank’s dividend has grown at a CAGR of 8% since 2016. This rate of growth remains higher than that of its industry peers. Besides increasing its dividend at a solid pace, the financial services company also maintains a conservative payout ratio, which implies that its payouts are sustainable in the long term.
TD’s strength lies in its well-diversified business model and steady expansion of both its loan and deposit bases, which support continued earnings growth. The bank’s emphasis on operational efficiency further boosts profitability. Additionally, strategic acquisitions continue to enhance TD’s market presence and revenue potential.
With its solid balance sheet and a focus on efficiency and growth, Toronto-Dominion Bank is well-equipped to keep creating long-term value for its shareholders.
