Investing $2,000 in dividend stocks can be an effective way to begin building a passive income stream while also positioning your portfolio for long-term growth. Dividend stocks offer regular cash payouts and have the potential to deliver decent capital gains in the long run. The key is to focus on TSX stocks with a long and reliable record of dividend payments and growth.
In addition, one should look for companies with distributions supported by resilient business models, steadily expanding earnings, and a sustainable payout. These fundamentally strong companies are better equipped to deliver consistent income and solid total returns across market cycles.
So, if you have $2,000, here are four dividend stocks to buy and hold forever.
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Dividend stocks #1: Canadian Utilities
Canadian Utilities (TSX:CU) is a top dividend to buy and hold forever due to its ability to sustain and grow dividends across market cycles. Its highly regulated and contracted business generates predictable earnings and cash flow across market cycles, supporting its payouts.
The utility company has raised its dividend for 53 consecutive years, which reflects the durability of its earnings and payouts. Canadian Utilities’s payouts are supported by the continued expansion of its global regulated rate base.
Looking ahead, Canadian Utilities’s planned investments of approximately $6.1 billion in regulated utility assets from 2025 to 2027 are expected to expand its rate base. The move will drive meaningful growth in earnings and cash flows, thereby supporting higher dividend payments.
Dividend stocks #2: Fortis
Fortis (TSX:FTS) is another top dividend stock to buy and hold forever. The utility company’s rate-regulated assets, with a focus on power transmission and distribution, enable it to generate and predictable cash flows, supporting higher dividend payments.
Fortis has raised its dividend for 52 consecutive years, reflecting the strength of its low-risk business model and growing cash flow.
Fortis is well-positioned to grow its dividend year after year. Its $28.8 billion capital plan will help expand and modernize its regulated infrastructure. Management expects the regulated rate base to grow at about a 7% annual pace, driving steady earnings growth. Notably, Fortis has guided for annual dividend increases of 4% to 6% through 2030. Moreover, rising electricity demand is likely to drive its financial performance and share price.
Dividend stocks #3: TC Energy
TC Energy (TSX:TRP) is another top Canadian dividend stock to buy and hold forever. The company operates a largely regulated, contracted energy infrastructure business that supports consistent payouts. TC Energy has increased its dividend for 25 consecutive years, which reflects the durability of its cash flows and sustainable payouts.
Notably, about 98% of its earnings before interest, taxes, depreciation, and amortization come from regulated assets or take-or-pay contracts. This operating structure limits its exposure to volatile commodity prices and adds stability.
Looking ahead, its low-risk capital-allocation framework, focus on high-return projects, and long-term contracts will drive its earnings and dividend payouts. TC Energy targets long-term dividend growth of 3% to 5%, making it a reliable income stock.
Dividend stocks #4: Bank of Montreal
Bank of Montreal (TSX: BMO) is a compelling dividend stock to buy and hold forever. The bank has paid dividends for 197 consecutive years, demonstrating the strength of its earnings and focus on returning cash to its shareholders. Further, BMO has grown its dividend by an average of 5.7% per year over the past 15 years.
BMO’s well-diversified business revenues, large and loyal deposit base, strong balance sheet, and operating efficiency consistently drive its earnings and dividend payments. The Canadian financial services giant is well-positioned to pay and increase its dividend, and maintains a sustainable payout ratio.
