Canadian dividend stocks could be attractive investments to generate passive income. Moreover, shares of companies that have consistently paid and increased their dividends, maintain a sustainable payout ratio, and have a resilient earnings base are the ones that you can count on for worry-free passive income.
So if you seek worry-free passive income, here are three Canadian stocks to buy and hold.
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Dividend stock #1: Fortis
Fortis (TSX: FTS) is a solid option for investors looking for worry-free passive income. This utility company’s rate-regulated operations generate stable revenues and predictable cash flows, regardless of market conditions. Additionally, its focus on energy transmission and distribution reduces exposure to risks associated with power generation and commodity price swings.
With its defensive business model and resilient cash flows, Fortis has consistently paid and steadily increased its quarterly dividends. Fortis has uniteruptedly raised its dividend for 51 years. Further, the company’s resilient earnings and growing rate base position it well to keep increasing its dividend in the coming years. Currently, FTS offers a yield of over 3.4%.
Looking ahead, Fortis’s $26 billion capital plan will enable it to expand its regulated asset base and strengthen its low-risk earnings. Fortis expects its rate base to grow at a compound annual growth rate (CAGR) of 6.5% through 2029, supporting steady earnings growth. This will support a 4% to 6% annual dividend increase during the same period. Further, rising electricity demand from data centres, mining, and manufacturing industries offers significant growth opportunities ahead for Fortis.
Dividend stock #2: Enbridge
Enbridge (TSX: ENB) is another reliable dividend stock for investors seeking stress-free passive income. This energy infrastructure giant operates oil and gas pipelines, natural gas utilities, and renewable energy projects. Its diversified operations, high system utilization, and contracted and regulated cash flow enable it to generate steady distributable cash flow (DCF), supporting higher dividend payments and growth.
It has consistently paid dividends since going public in 1953. Moreover, Enbridge has raised its dividend for 30 consecutive years. The energy infrastructure company also maintains a sustainable payout ratio of 60–70% of DCF and is offering an attractive yield of 5.7%.
Looking ahead, Enbridge targets mid-single-digit dividend growth and plans to distribute $40–$45 billion in dividends over the next five years. Its vast pipeline network, multi-billion-dollar capital projects, long-term contracts, and growing utilities and renewables presence position it well to pay and boost dividends for years to come.
Dividend stock #3: Bank of Montreal
Leading Canadian banks have a track record of consistently returning cash to shareholders. Notably, the top banks have been paying dividends for over a century, implying you can count on them for passive income. Among the top banks, Bank of Montreal (TSX: BMO) stands out for its attractive dividend history.
The bank has paid dividends for 196 years, the longest streak among Canadian companies. Moreover, its dividend has grown at a 5.4% CAGR over the past 15 years. This highlights the stability and resilience of its earnings through economic uncertainty.
The bank’s diverse revenue streams, solid deposit base, growing share in the personal banking space, high‐return wealth business, strong credit quality, and operational efficiency are likely to drive its earnings, enabling it to pay and increase its dividend in the coming years.
