There’s no shortage of great dividend stocks to buy on the Canadian market. Given the market volatility that we’ve seen in the past few weeks, there’s an increasing focus on defensive investments. And there’s one top Canadian dividend stock for investors to consider right now.
Here’s a look at that top Canadian dividend stock and why it belongs in your portfolio this month.
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Why Fortis stands out
The stock for Canadian investors to consider right now is Fortis (TSX: FTS). Fortis is one of the largest utility stocks on the continent. The company offers a portfolio of highly regulated electric and gas utilities with operations in the U.S., Canada and the Caribbean.
That adds a layer of geographic diversification to what is already seen as a highly defensive business model. That business model is simple, yet effective.
In short, Fortis provides utility service, for which it is compensated. That utility service is backed by regulated long-term contracts that span decades. This means that as long as Fortis continues to provide that utility service, the company generates a stable and recurring revenue stream.
That revenue stream allows Fortis to invest in growth initiatives while paying out a reliable and growing dividend. For investors seeking a top Canadian dividend stock, Fortis is hard to ignore.
Another appealing aspect of Fortis is the company’s approach to growth. Unlike most utilities, Fortis has a massive capital expenditure plan, which includes upwards of $25 billion earmarked through 2030.
The focus for those funds is grid modernization, renewable energy projects, and new transmission projects. Prospective investors should note that these initiatives are well ahead of regulatory mandates.
In other words, Fortis is ahead of the market and its peers.
Beyond the capital expenditure outlay, Fortis has completed a series of regulated asset acquisitions over the years. These have expanded the company’s footprint to new markets, often overlaying its transmission and distribution segments.
Dividend strength and consistency
One of the main reasons why Fortis is seen as a top Canadian dividend stock is its quarterly payout. As of the time of writing, Fortis offers a 3.5% yield.
This means that income-seeking investors who are considering this top Canadian dividend stock can expect a $30,000 investment to generate an income of approximately $1,047 in the first year.
The reason I say first year is that Fortis has another surprise for prospective investors. The company is just one of two in Canada that has provided investors with annual upticks to that dividend for 50 consecutive years or more.
That fact alone makes Fortis one of the top long-term options for any well-diversified portfolio.
Fortis is the top Canadian dividend stock
No stock is without risk, and with volatility increasing, the importance of diversifying has never been greater.
Fortunately, Fortis can offer investors defensive appeal, growth, and a tasty income to offset that volatility.
In my opinion, Fortis should be a core holding in any well-diversified portfolio.
