Finding top dividend stocks to invest in is the name of the game for many investors. I think there’s something to such a strategy, given the value of holding companies that have the willingness to return capital to shareholders (that’s supposed to be what investing is all about), as well as the ability to do so.
In order to pay out dividends that grow over time, companies are implicitly required to have solid earnings and cash flow growth. To maintain a given level of dividend growth over a long period of time, that sentiment is doubly true.
Here are three top Canadian dividend stocks I think fit the mantra for most long-term investors seeking reliable passive income.
Source: Getty Images
Enbridge
A higher-yielding Canadian dividend stock I continue to tout as a top option for gaining significant up-front yield is Enbridge (TSX:ENB).
In addition to the other names on this list, Enbridge has an impressive track record of dividend growth as well. However, as investors will note from the chart above, it’s also true that Enbridge has seen impressive capital appreciation in recent years. That mans that the pipeline operator’s 5.1% dividend yield was much higher previously.
I’ve long called for dividend investors to consider Enbridge as a way to generate up-front yield, but also as a capital appreciation play when the market realizes we’re not likely to get more pipelines in the future. And if we do – Enbridge will be the go-to company (in all likelihood), providing a solid growth and dividend base to build off of.
Fortis
A company with a meaningfully lower yield than Enbridge (at 3.2%), but one with perhaps the best dividend growth profile on the TSX, is Fortis (TSX:FTS).
Shares of the Canadian utility giant have been on a similar tear over the course of the past five years, roughly doubling over this timeframe. That’s impressive, considering the company’s 7% or so annual dividend growth rate over past decades.
The company has been able to return an increasing dividend distribution to investors each and every year in part to the company’s defensive and solid underlying business. We need energy, in any market environment, and consumers and businesses are going to pay to keep the lights and heat on. That’s a near certainty investors like right now.
For those thinking long-term, Fortis remains a top pick I’m going to continue pounding the table on right now. Regardless of what you think of AI, Fortis’ standing as a top way to play a surge in electrification, AI, and other energy-intensive trends is noteworthy.
Brookfield Infrastructure Partners
The last name on this list is one that doesn’t necessarily have the same chart as the first two companies mentioned in this piece. Brookfield Infrastructure Partners (TSX:BIP.UN) is another top dividend stock I think investors may be overlooking right now.
Now, this stock is one that’s still up over the course of the past five years, which may be surprising to some (given the shifting geopolitical headwinds for renewable energy companies).
That said, Brookfield’s truly diversified approach to developing new and sustainable forms of energy stands out as the reason why this company has been able to weather the storm. With a range of renewable energy sources (with nuclear/uranium surging right now, and leading the way higher for BIP), this is a stock I think can perform well, no matter what the pervasive narrative is in the market.
With a 4.7% dividend yield and a solid balance sheet relative to its peers in this sector, Brookfield Infrastructure remains a top pick of mine for long-term investors playing the inevitable transition toward clean energy over time.
