My Favourite Dividend Stocks for Outsized Returns

Enbridge is one of two dividend stocks with generous yields and strong outlooks, as they benefit from increasing energy demand.

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Key Points

  • • Altagas (TSX:ALA) offers a 3% dividend yield backed by strong fundamentals including 16% EBITDA growth to $342 million, reduced leverage, and growing energy demand driving both its midstream (63% of EBITDA) and utilities segments.
  • • Enbridge (TSX:ENB) provides a higher 5.5% dividend yield with 30 consecutive years of dividend increases, recent 12% EPS growth driven by diversified energy infrastructure including new U.S. utility acquisitions, and solid stock performance with 80% returns over five years.
  • 5 stocks our experts like better than Altagas and Enbridge

Energy demand has been steadily increasing. It’s forecasted to continue to increase over the long term. This is a reality that utility and energy infrastructure companies are benefitting from and preparing for. This is what makes these stocks some of the best dividend stocks out there.

Here are my favourite dividend stocks to buy today for reliable, growing dividend income for years to come.

AltaGas: A 3% dividend yield

AltaGas (TSX:ALA) is an energy infrastructure/utility company. Its midstream segment is a business that has been experiencing significant growth over the last few years. The utilities segment is also seeing strong growth, but this growth is a steadier kind of growth.

In the company’s latest quarter (Q2/25), its earnings before interest, taxes, depreciation, and amortization (EBITDA) increased 16% to $342 million. The midstream segment accounted for 63% of total EBITDA, and the utilities segment accounted for approximately 40%.

The key takeaways from the quarter are that AltaGas’s business is seeing strong demand and the company is well positioned both financially and operationally for sustained long-term growth. In the quarter, the company reduced its leverage even further, it continues to de-risk its operations, and there is no shortage of growth projects. This is all supported by strong demand and solid energy fundamentals.

At this time, AltaGas’s dividend yield is somewhat lower than it has been in its recent history. This is a function of the stock’s strong price performance over the last few years. In fact, as you can see in the graph below, AltaGas’s stock price has rallied almost 170% in the last five years and 28% in the last year alone.

Enbridge: A 5.5% yield

My other favourite dividend stock to buy today is Enbridge (TSX:ENB). Enbridge is a top Canadian energy infrastructure company that has a long history and a far-reaching network of infrastructure that has served North America for many years.

Today, Enbridge is also performing exceptionally well as it is also benefitting from growing energy demand. In Enbridge’s case, its growing utilities business has added a level of stability and predictability that has is quite evident. The company’s push into the utilities business came with its acquisition of three top U.S. gas utilities.

In short, Enbridge has responded to growing energy demand by investing in a diversified network. This network includes liquids pipelines, natural gas pipelines, gas utilities and storage, and renewable energy.

The company has done well with this, and posted a 12% increase in earnings per share in its latest quarterly result. This result came in above expectations and it will translate into Enbridge coming in at the high end of expectations for the full year as well. These results were driven by strong demand, record volumes, and the inclusion of the U.S. utility assets.

Finally, Enbridge has been good to investors for many, many years now. The company just posted its 30th year of consecutive dividend increases, and the stock price performance has been strong. As you can see from the graph above, Enbridge’s stock price has an 80% return in the last five years and a 25% return in the last year alone.

Fool contributor Karen Thomas has positions in Altagas and Enbridge. The Motley Fool recommends Enbridge. The Motley Fool has a disclosure policy.

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