Passive investing is boring. It involves consistently investing in low-volatility stocks that give regular returns and help you achieve long-term financial goals. There is no thrill of chasing targets as in the case of trading. The core objective of long-term investing is to reduce stress and bring financial freedom through the power of compounding.
My favourite stocks for dividend growth
Canada has some exciting dividend stocks that grow their dividends annually by double-digit percentages. Staying invested in them can increase yield in the long term.
Canadian Natural Resources (TSX:CNQ) has the advantage of being Canada’s largest and low-cost oil and gas producer with low-maintenance oil reserves. This stock is my favorite for its consistency in growing dividends for the last 24 years, within the range of 2–20%. Its robust free cash flow allocation towards debt repayment, dividends, and buybacks helps it grow dividends even during a crisis.
A $5,000 investment in 2015 would have given $127.70 in dividends, or a 2.5% yield, which would have grown to $653.30 in 2025, representing a 13% yield on investment.
Canadian National Railway
Canadian National Railway (TSX:CNR) stock is trading near its August 2021 levels as tariffs have reduced cross-border trade volumes. However, domestic trade volumes are keeping cash flows coming. The impact of trade volumes is such that the railway’s second-quarter revenue fell by 1% and it lowered its adjusted diluted earnings per share (EPS) guidance for 2025 from 10%–15% growth to mid-to-high single digits. Despite the challenges, the company has grown its dividends for the last 20 years in the 5–25% range.
A $5,000 investment in 2015 would have given $77.50 in dividends, or a 1.5% yield, which would have grown to $220.10 in 2025, representing a 4.4% yield on investment.
goeasy stock
goeasy (TSX:GSY) stock can give sector-wise diversification in the subprime lending sector. The lender survived the 2008 Global Financial Crisis with just a six-year pause in dividend growth. Even in those six years, it paid a quarterly dividend regularly. The subprime lender has come a long way from that time and improved its credit profile and business risk model, and is now growing its lending portfolio by value, volume, and quality (lower credit risk). The interest earned from the larger loan portfolio has been used to grow dividends in the 5.5–46% range over the last 11 years.
A $5,000 investment in 2015 would have given $101.60 in dividends, or a 2% yield, which would have grown to $1,483.36 in 2025, representing a 29.6% yield on investment.
My favourite stock for dividend reinvestment
The above stocks are growing dividends at a high rate, as they buy back shares. BCE (TSX:BCE) is a dividend stock that grows dividends by offering a dividend reinvestment plan (DRIP). A DRIP grows the value of income-generating stocks faster by revinvesting the dividend, allowing you to compound returns.
The company slashed its dividend by 56% in July for the first time in 16 years as the regulatory change allowing competitors access to its 5G infrastructure at wholesale prices diminished the returns on infrastructure investment. The dividend cut has come as welcome news, as it can now sustain its dividends with the payout ratio falling below 100% of free cash flow.
The worst may finally be over for BCE, and revenue and free cash flow could pick up from here. It has completed the acquisition of Ziply Fibre, which will increase its leverage ratio to 3.8 times in the short term. However, lower capital spending and strong demand for Ateko managed services, cybersecurity, and Bell artificial intelligence (AI) Fabric could drive BCE’s next growth phase. While dividends may remain stressed in the short term, they could grow at an accelerated rate as earnings improve. In the meantime, the DRIP will accumulate value in income stocks.
My favourite stock for monthly payouts
SmartCentres REIT is my favourite stock for its monthly payouts and 6.9% annual yield. Its strength is its largest tenant, Walmart, which helps it maintain high occupancy. The REIT has paid regular monthly dividends without any cuts for the last 21 years.
