If you’re looking for worry-free income for the next 10 years, consider adding high-quality dividend stocks to your portfolio. While no stock is 100% safe, the top Canadian stocks have sustainable payout ratios, strong earnings, solid fundamentals, and a proven record of paying and increasing their dividends, making them relatively safe bets to earn a steady passive income.
Against this background, here are dividend stocks whose payouts are ultra safe.
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Canadian Natural Resources
Canadian Natural Resources (TSX: CNQ) offers an ultra-safe dividend, thanks to its high-quality assets, resilient cash flow, and sustainable payout ratio. Notably, this Canadian oil and gas producer increased its dividend for 25 consecutive years at a compound annual growth rate (CAGR) of about 21% in the last 25 years. Moreover, it offers a compelling yield of 5.8% near the current price levels.
Its stellar distribution history reflects the strength of its diversified portfolio and ability to generate robust cash flows even through volatile commodity cycles.
Looking ahead, its portfolio of long-life, low-decline assets will continue to offer stability and generate substantial free cash flow, driving payouts. Further, its high-value, zero-decline synthetic crude production, efficient operations, conventional projects, and opportunistic acquisitions will likely strengthen cash flow.
Moreover, Canadian Natural has a healthy balance sheet and focuses on reducing net debt. In addition, a large inventory of low-capital-intensity projects positions the company well for sustained future growth, enabling the company to consistently enhance its shareholder value.
Fortis
Fortis (TSX: FTS) is one of the safest and 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. Fortis has a stellar payout history, having raised its dividend for 51 consecutive years. In addition, FTS offers a decent yield of 3.5%.
The company’s impressive distribution history reflects its financial strength and commitment to enhancing shareholder value. Notably, 93% of its business is focused on electricity and natural gas transmission and distribution. This structure reduces operational risks and improves the overall stability of its business. Also, its payout ratio is well covered by the rate-regulated businesses.
Looking ahead, Fortis is investing heavily in infrastructure. Its capital investments in modernizing transmission systems and upgrading infrastructure position it well to benefit from energy transition opportunities and drive long-term growth. In addition, rising demand from data centres, mining, and manufacturing adds further growth potential.
The company expects to grow its rate base at a CAGR of 6.5% till 2029, which will drive steady earnings growth and support its higher payouts. Fortis is targeting annual dividend growth of 4% to 6%, which appears achievable given its growing rate base and rising electricity demand.
Toronto-Dominion Bank
Among leading Canadian banks, which are known for their exceptional track record of dividend payments and growth, Toronto-Dominion Bank (TSX: TD) is worth buying for the next decade.
TD has uninterruptedly paid dividends for over 167 years, reflecting the durability of its earnings and commitment to rewarding its investors with higher cash. Moreover, the financial services company’s dividend has grown at a CAGR of 8% since 2016, which remains higher than that of its industry peers.
Toronto-Dominion Bank’s payouts are sustainable in the long term. Moreover, this banking stock offers a dividend yield of 4.1% at the current levels.
Looking ahead, TD’s well-diversified revenue model and steady expansion of loans and deposits will support its earnings growth. The bank’s emphasis on operational efficiency and a strong balance sheet will further boost profitability. Additionally, strategic acquisitions will continue to expand TD’s market presence and enhance its income potential, supporting its payouts.
