Investing in dividend stocks is an excellent long-term wealth-building strategy. In addition to capital appreciation, shareholders benefit from steady dividend income, which they can reinvest to generate higher returns over time. Moreover, the consistent dividend payouts of these companies make them less vulnerable to market volatility, offering greater stability to investors’ portfolios. Against this backdrop, let’s look at three top Canadian stocks that could help investors build wealth over time.
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Enbridge
Enbridge (TSX: ENB) is a diversified energy infrastructure company engaged in transporting oil and natural gas through its extensive pipeline network, operating natural gas utility assets, and managing renewable energy generation facilities. It earns around 98% of adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) from regulated assets and long-term take-or-pay contracts, with 80% of these earnings being inflation-indexed. Additionally, the company’s financials have no material exposure to commodity-price fluctuations. Therefore, its financials are less prone to market volatility.
Backed by its stable and predictable financials, the Calgary-based company has delivered an impressive average total shareholders’ return of 12% over the last 20 years. Additionally, it has paid dividends for 70 previous years, while raising its dividend at an annualized rate of 9% since 1995. Also, it currently offers a robust forward dividend yield of 5.65%. Moreover, the company is actively expanding its asset base, committing $9-$10 billion annually to fuel long-term growth. Amid these investments, the company’s management expects its adjusted EBITDA, discounted cash flow per share, and EPS (earnings per share) to grow in mid-single digits in the coming years. Given these strong growth prospects, Enbridge is well-positioned to sustain dividend growth, making it an attractive buy.
Fortis
Another Canadian dividend stock that I am bullish on is Fortis (TSX: FTS), a regulated electric and natural gas utility company serving 3.5 million customers across Canada, the United States, and the Caribbean. With approximately 93% of its assets dedicated to low-risk transmission and distribution operations, the company generates stable and reliable financials regardless of macroeconomic conditions, ensuring consistent returns for its investors. Over the last 20 years, the company has delivered a healthy return of around 520% at an annualized rate of 9.55%. It has also rewarded its shareholders with consistent dividend growth for 51 previous years and currently offers a healthy dividend yield of 3.44%.
Moreover, Fortis is continuing with its $26 billion capital investment plan, which would grow its rate base at an annualized rate of 6.5% to $53 billion by the end of 2029. Along with these growth initiatives, improving operating efficiencies and favourable changes in customer rates could support its financial growth. Amid these healthy growth prospects, the company’s management expects to raise its dividend by 4-6% annually through 2029.
Canadian Natural Resources
Canadian Natural Resources (TSX: CNQ) is my final pick. The Calgary-based oil and natural gas company operates a diversified and balanced asset base. Thanks to its sizable, high-quality reserves and efficient operations, the company maintains a low breakeven point, enabling it to generate strong cash flows. These strong cash flows have allowed it to raise its dividend at a 21% CAGR (compound annual growth rate) for the last 25 years, while its forward dividend yield stands at 5.41%. Additionally, the company has delivered reasonable returns of around 585% in the previous 20 years at an annualized rate of 10.1%.
Moreover, CNQ possesses extensive reserves with a proven reserve life index of 32 years, primarily comprising high-value petroleum products. It plans to drill 182 net primary heavy crude oil multilateral wells this year. Along with organic growth, the company also focuses on strategic acquisitions, boosting its production capabilities. Given these healthy growth prospects, I believe CNQ will continue rewarding its shareholders with healthy dividend yields in the coming years.
