3 Hidden Dividend Gems With Rock-Solid Payments

Looking for a trio of dividend gems for your portfolio? Here’s a diversified mix of dividend-paying stars that also offer defensive appeal and growth.

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Key Points
  • Three Canadian dividend gems to consider now: Fortis (TSX:FTS), Bank of Montreal (TSX:BMO), and Enbridge (TSX:ENB), pairing defensive cash flows with growth potential.
  • Fortis yields about 3.55% with 50+ consecutive annual raises, while BMO yields about 3.67% and has paid dividends for two centuries as it expands across 32 U.S. states.
  • Enbridge offers a higher, roughly 5.60% yield backed by its toll-like pipeline network, regulated gas utility and renewables, and three decades of dividend increases.

There are some great dividend gems on the market today for investors to consider. Many of these offer decades of on-time dividend payments and growth potential.

Here’s a look at three of those dividend gems to consider adding to your portfolio today.

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Invest in a solid defensive stock

When it comes to rock-solid payments from dividend gems, it’s hard not to think immediately of Fortis (TSX: FTS). Fortis is one of the largest utility stocks in North America, with 10 sprawling operating regions that include Canada, the U.S., and the Caribbean.

Those operating regions generate a stable and recurring revenue stream that is backed by long-term regulated contracts. That stability allows Fortis to invest in growth initiatives and pay a respectable quarterly dividend.

Recently, that growth has come in the form of investments across existing operations. More specifically, they include transitioning over to renewables and upgrading existing facilities.

Turning to dividends, Fortis really shines. As of the time of writing, that dividend pays out 3.6%. Even better, Fortis has a long history of providing investors with the generous annual upticks to that dividend.

In fact, the company has amassed over 50 consecutive years of increases, making it one of only two companies in Canada to pass that 50-year milestone.

In other words, Fortis’s reliable revenue stream and growing dividend make it one of the top dividend gems for any long-term portfolio.

Banking on a stable income stream

When seasoned investors think about dividend gems, Canada’s big banks come to mind. They generate a stable revenue stream, offer long-term growth appeal from international markets, and pay out some of the best dividends on the market.

And the big bank stock that is one of the dividend gems to buy now is Bank of Montreal (TSX: BMO).

BMO is the oldest of the big bank stocks, and as a result, has been paying out dividends for two centuries without fail. The bank also has a solid history of providing annual upticks to its dividend.

As of the time of writing, that yield works out to a robust 3.7%. Prospective investors should note that BMO’s yield is smaller than that of the other big banks, but there’s a good reason for that.

BMO is more conservative when it comes to its payout ratio over its younger peers. Despite that, BMO has further expanded in recent years into the U.S. market, where it now enjoys a presence in 32 state markets.

This blend of conservative income and strategic growth makes BMO a reliable long-term pick and one of the must-have dividend gems to own.

Generate a juicy income

Rounding out the three dividend gems for investors to consider is Enbridge (TSX: ENB). Enbridge is a top option for investors thanks to its defensive business model, strong growth potential, and one of the best dividends on the market.

Let’s break those down.

That defensive business model primarily, but not exclusively, stems from the company’s robust pipeline network. Enbridge operates one of the largest and most complex pipeline networks on the continent, with both crude and natural gas segments.

Each day, Enbridge transports massive amounts of both, generating a passive income that’s not unlike a toll road.

Outside of that core business, Enbridge also boasts a renewable energy business as well as a natural gas utility. Both provide a recurring and stable revenue stream backed by long-term regulated contracts.

That’s significant as it allows Enbridge to invest in new growth initiatives and pay out a handsome quarterly dividend.

As of the time of writing, Enbridge offers investors an attractive 5.6% yield. Prospective investors should note that Enbridge has also provided three decades of annual increases to that dividend.

Your dividend gems to buy

All three of the stocks mentioned above offer investors a solid yield, growth potential, and even some defensive appeal.

This not only makes them great dividend gems to buy now, but solid options for any well-diversified long-term portfolio.

Fool contributor Demetris Afxentiou has positions in Enbridge and Fortis. The Motley Fool recommends Enbridge and Fortis. The Motley Fool has a disclosure policy.

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