I’m always on the lookout for world-class dividend stocks to put forward as ideas for long-term investors looking for stable and growing passive-income streams in retirement.
Of course, balance sheet stability and cash flow growth are integral to any bullish thesis around a dividend stock. That’s because a given company needs to both survive and show some level of growth in order to maintain and grow its dividend over time.
The two companies I’m going to highlight in this piece certainly have plenty of the aforementioned two factors. These are the top long-term buy-and-hold stocks I think investors can sleep well owning. Given the increasing uncertainty in the market right now, that’s valuable.
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Toronto-Dominion Bank
One of Canada’s largest banks, and the one with the largest retail banking footprint outside of Canada, Toronto-Dominion Bank (TSX: TD) continues to be my top Canadian bank stock pick for those thinking for the long term.
Much of this thesis revolves around TD’s historical total-return profile, which is superior to most of its peers. Besides being among the largest Canadian banks, I also think the company’s highly diversified revenue streams (geographically and across various operating segments) make for more stable returns over time.
If the Canadian market is underperforming, investors can bank on TD’s strong presence in the U.S. to make up for it. Or, if retail banking is slowing, growth in capital markets and other businesses can offset these concerns on a quarter-to-quarter basis.
With one of the best growth profiles of its peers, I also think TD’s robust dividend yield of 3.7% in combination with its capital appreciation upside makes this the best big bank for investors considering exposure to the Canadian financial sector to consider.
Fortis
I continue to pound the table on Fortis (TSX: FTS) as the best dividend stock in the Canadian market for a wide array of reasons.
The company’s status as a leading Canadian utilities company positions Fortis well to take advantage of long-term growth trends in this space. Energy consumption broadly is going to increase thanks to the rise of AI and other revolutionary technologies. This fact obviously bodes well for companies like Fortis that provide the electricity and natural gas needed to support power generation for millions of customers.
But it’s Fortis’s stable cash flow profile, which is driving consistent dividend growth, that I think is more important to long-term investors. With most of the company’s revenue derived from regulated utility services provided in developed markets, there’s a stability factor here that benefits many defensive investors. And as the company continues to return much of the excess cash flows it receives to investors, dividend investors benefit from this 6-7% annual dividend growth the company has delivered for many years.
The company’s 51-year track record of dividend hikes is one that’s nearly unmatched in this sector. Fortis continues to be a top dividend stock I will tout as one worth holding, until and unless something major derails this thesis (which I don’t foresee).
