Dividend investing in Canadian stocks that offer a high dividend-growth rate backed by solid fundamentals can be an excellent way to generate passive income over time. Reinvesting the dividends you earn can help you compound the wealth growth to maximize your long-term returns. Against this backdrop, here are some of the top dividend stocks you can own for the long run.
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Fortis
Fortis (TSX: FTS) is a $36.64 billion market-cap Canadian utility holdings company that owns and operates several electric and gas utility businesses across Canada, the U.S., and the Caribbean. In a highly rate-regulated market and relying on long-term contracted assets for revenue, the company generates predictable cash flows.
Fortis is a Canadian dividend stock with a lengthy dividend-growth streak, spanning over half a century. The stock has consistently hiked dividends for over 50 years. Thanks to its defensive business model, the stock is capable of funding its dividend growth at an annual 4-6% rate through to 2030.
Canadian National Railway
Canadian National Railway (TSX: CNR) is not a stock known for high-yielding dividends. As of this writing, it trades for $136.98 per share, paying investors $0.8875 per share each quarter, translating to a 2.59% dividend yield. The dividend yield itself might not seem too appetizing, but we are focusing on dividend growth here.
The company operates in a highly defensive industry with massive barriers to entry. Where it might lack in terms of high-yielding dividends, CNR stock makes up for it with dividend growth. The stock has paid investors dividends for a long time, but for the last 28 years, it has grown its payouts at a compounded annual growth rate (CAGR) of 15% since 1996.
Canadian Natural Resources
Canadian Natural Resources (TSX: CNQ) is one of the biggest energy companies in Canada. The $102.90 billion market-cap oil producer has a stellar history of dividend distribution and growth. As of this writing, the stock trades for $49.43 per share, and it pays $0.5875 per share each quarter. This translates to a juicy 4.75% dividend yield.
As attractive as the dividend yield is, we’re considering the dividend-growth track record, and CNQ stock does not disappoint. This stellar oil and gas producer has increased payouts for the last 25 consecutive years at a remarkable 21% CAGR. The company’s low-decline and long-life assets ensure stable production that allows the company to fund capital expenses and grow payouts over time.
goeasy
goeasy (TSX: GSY) is the only stock I’ve mentioned here that operates in the financial services sector. The $2.06 billion market-cap company offers alternative lending solutions to borrowers who cannot qualify for loans from standard lenders. It also offers unsecured installment loans to consumers.
The demand for its services has been solid over the years, allowing the subprime lender to grow its revenue and earnings at double-digit rates. The inflow of money has also allowed the stock to hike dividends at an exceptional rate over the years. The stock has increased dividends for a decade. In February 2024, the stock hiked its payouts by 21.9%.
As of this writing, the stock trades for $128.32 per share, pays investors $1.46 per share each quarter, translating to a 4.55% dividend yield.
Telus
Telus (TSX: T) is one of the Big Three Telcos in Canada, making it a leading company in another industry with higher barriers to entry than most others. The company also has significant operations across other sectors of the economy through various subsidiaries. Telus is an excellent dividend stock that has increased payouts 27 times in the last 17 years.
As of this writing, Telus trades for $19.02 per share and pays investors $0.4184 per share, translating to an 8.8% dividend yield. The company’s management targets semi-annual dividend hikes of 7-10%.
Foolish takeaway
Building a portfolio of high dividend-growth stocks and holding it in a Tax-Free Savings Account (TFSA) means you can enjoy the compounded wealth growth without incurring taxes on the dividends or capital gains. These five TSX dividend stocks can make an excellent foundation for a self-directed and income-focused TFSA portfolio.
