Many Canadian stocks listed on the TSX pay attractive dividends, but only a few have sustainable payouts. These are fundamentally sound companies with well-established businesses, a resilient earnings base, and a commitment to enhancing shareholder value across all market conditions.
Notably, these low-volatility companies are less sensitive to market swings and generate steady distributable cash flow, which supports strong dividend distribution.
In this context, here are three Canadian stocks with highly sustainable dividends. These companies have the financial strength to maintain, and even increase, payouts in the coming years, making them top choices for generating passive income.
Top dividend stocks #1: TC Energy
TC Energy (TSX:TRP) is one of the top Canadian stocks with highly sustainable dividends. With a solid record of increasing its dividend for 25 consecutive years, this energy infrastructure company has proven its business model can weather market fluctuations while consistently rewarding shareholders.
The natural gas transporter generates steady earnings and maintains a stable cash flow profile across all market cycles. Around 97% of its earnings come from regulated operations or long-term take-or-pay contracts. This operating structure provides a solid foundation for sustaining and growing its dividend in the years ahead.
TC Energy’s extensive pipeline network plays a critical role in connecting low-cost natural gas to key regions across North America, ensuring steady demand for its infrastructure. Moreover, it also has growing exposure to nuclear, wind, solar, and natural gas projects. This diversification positions TC Energy to benefit from the global transition to cleaner energy, enhancing its long-term growth potential.
TC Energy’s investments in long-life, low-risk projects will expand earnings while supporting annual dividend growth of approximately 3% to 5%.
Top dividend stocks #2: Fortis
Fortis (TSX:FTS) is another compelling dividend stock with sustainable payouts. It has raised its dividend for 52 straight years, thanks to its stable, rate-regulated utility operations, focused largely on electricity transmission and distribution.
Looking ahead, Fortis’s payouts are sustainable, supported by regulated assets and predictable cash flow. Moreover, the company is well-positioned to benefit from rising electricity demand and the broader shift toward clean energy.
Fortis’s $28.8 billion capital program will help upgrade and expand its rate base, thereby supporting earnings and dividend growth. Management expects this investment to grow the company’s rate base by roughly 7% annually through 2030. This sets the stage for sustained dividend increases, with Fortis projecting annual dividend growth of 4% to 6% over the next decade.
Top dividend stocks #3: Emera
Investors can rely on Emera (TSX:EMA) stock for sustainable dividends. Emera has raised its dividend for 19 consecutive years. The company’s payouts are supported by regulated utility assets, which provide a dependable stream of cash flow.
Emera’s $20-billion capital program through 2030 is expected to grow its rate base by 7% to 8% annually. This expansion is projected to drive earnings growth of 5% to 7% per year, creating a solid foundation for dividend increases. The company plans to raise its dividend by 1% to 2% annually in the coming years, supported by its steadily growing earnings base.
Emera is expanding its solar capacity, modernizing Tampa Electric’s power grid, and enhancing energy storage and transmission infrastructure in Nova Scotia. These initiatives strengthen the company’s operational capabilities and are expected to boost earnings and cash flow over time.
