If you’re seeking stress-free passive income for the next 20 years, high-quality dividend stocks could be one of your best long-term investments. While no stock can offer a completely risk-free dividend, many top Canadian companies generate strong earnings and maintain sustainable payout ratios. These fundamentally strong companies have been rewarding shareholders through regular dividend payments and steady growth and are dependable income stocks.
Against this background, here are two dividend stocks built to pay you for the next 20 years.
Dividend stock #1: Fortis
Investors seeking stocks to generate worry-free passive income for two decades could consider Fortis (TSX:FTS) stock. This electric and gas utility company operates a defensive business model centred on rate-regulated assets, which means most of its revenue and cash flows are predictable. These assets provide the company with dependable cash flow, allowing it to sustain and steadily grow its quarterly dividends.
Moreover, this blue-chip company focuses mainly on energy transmission and distribution. This operating structure insulates it from the risks associated with power generation and commodity price fluctuations. Thanks to its growing and resilient cash flows, Fortis increased its dividend for 51 consecutive years. Further, the company’ steady earnings base positions it well to keep growing its dividend in the coming years.
Fortis’s $26 billion capital expenditure plan is expected to expand its regulated asset base. Notably, Fortis projects its rate base to grow at a compound annual growth rate (CAGR) of 6.5% through 2029. This expanding base will drive higher earnings and give the company the financial flexibility to continue increasing its dividend by 4% to 6% annually. Meanwhile, rising electricity demand from sectors like manufacturing and data centres provides further tailwinds for growth.
In short, Fortis’s defensive business model, growing rate base, demand tailwinds, position it well to pay and increase its dividend.
Dividend stock #2: Enbridge
When it comes to dependable income, Enbridge (TSX:ENB) stands out for its ability to pay and increase its quarterly dividends regardless of market conditions. The energy transportation company has a 30-year track record of increasing its quarterly dividends. Moreover, it has paid regular dividends for over 70 years.
Enbridge’s solid payouts are supported by a resilient business model that generates stable earnings and distributable cash flow (DCF) across all economic and commodity cycles. Further, Enbridge pays out about 60% to 70% of its DCF in dividends. This balanced approach gives it enough flexibility to reward shareholders while still investing in new growth opportunities that can drive future expansion.
Enbridge’s vast North American pipeline network forms consistently witnesses high utilization rates. Further, the company benefits from a diverse mix of revenue sources, supported by low-risk, long-term commercial agreements. In fact, about 98% of its earnings before interest, taxes, depreciation, and amortization stems from regulated returns or take-or-pay contracts. This structure ensures a steady flow of cash, insulating Enbridge from volatile energy prices and driving dividend payments.
Looking ahead, Enbridge’s pipeline business is likely to deliver steady growth led by higher system utilization. Meanwhile, Enbridge is tapping into artificial intelligence-driven opportunities. Enbridge is likely to benefit from the global energy transition opportunities. Overall, Enbridge is poised to maintain its dividend-growth streak for years.
