Blue-chip stocks offering dividends are an attractive option to generate steady passive income. These companies are large-cap, well-established businesses with a proven operating model and strong fundamentals. Their scale, stable cash flows, and growing earnings base allow them to pay regular dividends and steadily increase them over time.
While blue-chip companies are reliable dividend payers, dividends are not guaranteed. A company can reduce or suspend its payouts if business conditions deteriorate. Thus, one should avoid concentrating their capital in a single stock. By spreading investments across multiple sectors, Canadians can reduce risk and build a more resilient income stream that withstands market volatility.
Against this background, here are three must-own blue-chip dividend stocks for Canadians.
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Blue-chip dividend stocks #1: Enbridge
Enbridge (TSX: ENB) is a must-own dividend stock for Canadians. The energy infrastructure giant has consistently raised dividends for decades. It recently announced a 3% increase in its quarterly dividend to $0.97 per share, or $3.88 annually. This latest hike extends Enbridge’s remarkable track record to 31 consecutive years of dividend growth.
Enbridge’s dividend payments are supported by its highly resilient business model. Approximately 98% of Enbridge’s EBITDA stems from regulated assets or long-term, take-or-pay contracts. This operating structure insulates cash flows from swings in oil and gas prices. Moreover, the majority of its EBITDA benefits from revenue inflators and regulatory protections. In addition, it targets a sustainable payout ratio.
Enbridge’s vast pipeline and infrastructure network connects key North American supply and demand corridors. This will drive utilization of its systems and support earnings. Enbridge is also likely to benefit from its expanding utility business and rising energy demand. Its earnings and distributable cash flow are projected to grow at a mid-single-digit rate in the medium term, enabling it to raise its dividend at a similar pace.
Blue-chip dividend stocks #2: Canadian Natural Resources
Canadian Natural Resources (TSX: CNQ) is an attractive blue-chip dividend stock to buy and hold. This oil and gas company has raised its dividend for 25 consecutive years. Moreover, it increased its dividend at a compound annual growth rate (CAGR) of 21% during that period. Based on its current quarterly dividend of $0.588 per share, the Canadian energy giant offers a compelling yield of about 5.3%.
Its strong balance sheet and diverse, long-life low low-decline reserves and asset base drive its earnings and cash flow, supporting its payouts.
Looking ahead, CNQ appears well-positioned to sustain and grow its payouts. Its resilient business model, solid asset base, disciplined capital allocation, operating efficiency, and large inventory of proved undeveloped reserves, along with strategic acquisitions, augur well for growth.
Blue-chip dividend stocks #3: Toronto-Dominion Bank
Toronto-Dominion Bank (TSX: TD) is another top dividend-paying blue-chip stock to consider now. It has paid dividends for 169 consecutive years. Moreover, since 2016, its dividend has grown at a CAGR of 8%, driven by rising earnings.
TD’s payouts are supported by a diversified revenue model and the steady growth of its loan and deposit base. Moreover, its strong balance sheet and focus on operational efficiency further enhance profitability. In addition, strategic acquisitions are expected to expand TD’s market presence and generate incremental income over time.
The bank targets a payout ratio of 40% to 50%, which appears sustainable in the long term.
