Dividend stocks are often thought of as investments for investors who are approaching retirement and need income. However, Canadian dividend stocks can play a huge role in building long-term wealth, especially when they come from reliable, high-quality companies.
When you earn dividends, you’re not just collecting income. You’re earning returns immediately that can be reinvested into more shares or new stocks, which continues to compound your returns.
That can be incredibly powerful and advantageous, particularly during volatile markets when ultra-safe Canadian stocks are still making their dividend payments and stocks across the board are trading cheaply.
That’s why reliable Canadian dividend stocks that you can have the confidence to hold through any market are so important. High-yield stocks are more attractive, but chasing the highest yield can be risky, especially if that dividend isn’t sustainable.
In fact, companies with ultra-safe dividend yields often end up being better long-term investments anyway. Because they aren’t paying out every dollar they earn, they can reinvest in their businesses, grow cash flow, and increase dividends over time.
So, if you’re looking for reliable Canadian dividend stocks that you can buy now and hold for years, here are three of the best on the TSX.
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Two of the safest dividend stocks that Canadians can own
If you’re looking for reliable Canadian dividend stocks to buy now, two of the safest you can consider are Enbridge (TSX: ENB) and Fortis (TSX: FTS). Both operate incredibly reliable businesses that generate predictable cash flow year after year, which is exactly what you want when you’re relying on dividends.
Fortis is a regulated utility company that owns electricity and gas assets across North America. Because most of its business is regulated, Fortis earns a set return on its investments, which makes its cash flow extremely stable and predictable. That stability is what allows Fortis to pay a reliable dividend and steadily increase it over time.
In fact, Fortis has increased its dividend for more than 50 consecutive years. And today, the stock offers a yield of roughly 3.5%, and its payout ratio sits just under 75%, which is right in the middle of its historical range of roughly 70% to 80%.
That margin of safety not only ensures the dividend is sustainable, but it also allows Fortis to continue expanding its operations to ensure future dividend increases.
In many ways, Enbridge is similar to Fortis, and while its business isn’t as regulated as Fortis’s, it’s still incredibly reliable.
Enbridge owns a regulated utility business too, but most of its business comes from its massive energy infrastructure network, which is not only essential to the North American economy but is also largely backed by long-term contracts that generate steady, predictable cash flow.
So, with Enbridge offering a dividend yield of roughly 6%, and with its payout ratio expected to be no higher than 68% this year, even if it only achieves the low end of its distributable cash flow guidance, it’s easily one of the best Canadian dividend stocks to buy now.
That’s why it’s no surprise that, like Fortis, Enbridge also has a lengthy track record of consistent annual dividend increases that have lasted for more than three straight decades.
One of the best real estate stocks to buy for passive-income seekers
In addition to Fortis and Enbridge, another top Canadian dividend stock you can buy with confidence is Granite REIT (TSX: GRT.UN).
Granite owns a portfolio of high-quality industrial and logistics properties, many of which are leased to strong, long-term tenants. Furthermore, demand for these properties has been rising rapidly, allowing Granite to be not just a reliable dividend stock but a solid long-term growth stock.
With the stock still trading cheaply in this environment, Granite offers a compelling dividend yield of roughly 4.1%. But what’s even more important for investors is that its payout ratio of adjusted funds from operations sits at just 68%.
Furthermore, that payout ratio has been declining in recent years, even as Granite has continued to increase its distribution annually.
So, if you’re looking for a high-potential Canadian dividend stock that you can own confidently for years, Granite is undoubtedly one of the best to consider.
