Dividend investors in Canada have plenty of choices right now. That said, I think a smaller group of dividend-paying stocks stands out for pairing reliable income with consistent, long-term growth.
For those willing to be patient, these businesses can quietly compound wealth in the background while you focus on everything else in your portfolio.
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Fortis
My top pick as a “sleep-at-night” stock worth owning over the long term is Fortis (TSX:FTS). At least, this stock is near the top of my list at this moment for sure.
Indeed, Fortis is the classic “sleep-at-night” utility, with 10 regulated electricity and gas operations across North America. Perhaps most notably, this company’s 52-year dividend-growth streak is among the best and longest in Canada. Fortis’s regulated rate base underpins highly predictable cash flows, supporting a current yield around the mid-3% range and a payout ratio in the 70–75% band. That’s reasonable for a utility giant like Fortis.
Over the last five years, Fortis has grown revenue at roughly 6% annually and its dividend at about 5% per year. That’s in line with management’s long-term guidance. Looking ahead, Fortis is targeting 4% to 6% annual dividend growth. This capital return to shareholders is expected to be backed by expected earnings-per-share growth of roughly 6%, driven by ongoing rate-base expansion and grid modernization projects.
For long-term investors, that combination of steady mid-single-digit earnings growth, a reliable yield, and regulated infrastructure assets makes Fortis a compelling core holding to anchor a dividend-growth portfolio over time.
Canadian National Railway
One of Canada’s premier wide-moat companies that I’ve remained bullish on, Canadian National Railway (TSX:CNR) is another top pick on my list of undervalued dividend stocks to consider right now.
Operating a coast-to-coast network linking the Atlantic, Pacific, and Gulf coasts and moving essential goods through all parts of the economic cycle, CNR has high barriers to entry and natural pricing power. This business model has allowed CN Rail to compound earnings and free cash flow over many years while still investing heavily in its network.
The company has a long history of annual dividend increases, supported by disciplined capital allocation and an efficient operating ratio that’s among the best in North America. With volume growth tied to population, trade, and industrial activity rather than any single commodity, CN’s diversified freight mix helps smooth out volatility in specific sectors.
For long-term investors looking for a blend of dividend growth and capital appreciation, CN’s durable competitive advantages, strong balance sheet, and consistent profitability provide a solid fundamental case to own the stock and keep holding as earnings and dividends grow over time.
