If you’re a long-term investor, you probably already know that some of the best long-term investments that you can own are high-quality and consistent dividend growth stocks.
Not only do the best dividend growth stocks offer investors consistent and reliable passive income, but they also provide the opportunity for that income to grow year after year.
That consistent growth year in and year out is where the real power comes from. As those dividends increase, you can reinvest that cash back into your portfolio, allowing compounding to accelerate over time.
Furthermore, what makes dividend growth stocks even more attractive is that the companies that increase their payouts consistently are usually some of the highest-quality companies in the economy.
For example, in order to not just consistently pay a dividend, but continue to increase it, these stocks need to be profitable, they need to consistently generate reliable cash flow, and they need to have strong enough operations to continue dominating their industries for years to come.
That’s why many of these reliable dividend growth stocks are ideal long-term holdings.
So, with that in mind, if you’re looking for reliable Canadian dividend stocks that continue to hike their payouts, here are three high-quality companies that stand out.
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Two top utility stocks that are perfect for passive income seekers
There’s no question that utility stocks are some of the best dividend growth stocks you can buy, and a lot of that comes down to the nature of the industry.
Utility stocks are ideal dividend growth stocks because they operate essential services that people need every single day, they face very little direct competition, and in many cases, their rates are regulated by the government.
That combination leads to extremely reliable and predictable cash flow, which is exactly what you want when you’re looking for stocks that can consistently increase their dividends.
Because their earnings are so stable and visible, these companies can confidently reinvest in their operations while continuing to raise their payouts year after year.
Therefore, it’s no surprise that they’re some of the best long-term dividend stocks you can own.
For example, Fortis (TSX:FTS) is one of the most reliable dividend growth stocks on the TSX. The company operates regulated utility assets across Canada, the U.S., and the Caribbean, giving it a highly diversified base of predictable earnings.
That stability has allowed Fortis to increase its dividend consistently for more than half a century, the second-longest dividend growth streak in Canada. And today the stock offers a current yield of roughly 3.3%.
Meanwhile, Emera (TSX:EMA) is another top utility stock with a long track record of compelling dividend growth. Just like Fortis, it also owns a mix of regulated electric and gas utilities across North America, generating steady and reliable cash flow.
And while in recent years Emera has offered slightly slower dividend growth potential than Fortis, its current yield is sitting higher than Fortis’ at roughly 4%.
A top energy infrastructure stock
In addition to Fortis and Emera, another incredible dividend growth stock that Canadian investors can buy now is Enbridge (TSX:ENB).
Enbridge shares a lot of the same characteristics that make utility stocks so attractive, even though its business is structured a bit differently. And while it does own a utility segment, the majority of Enbridge’s operations are in energy infrastructure, particularly pipelines.
The reason it’s such a reliable dividend stock, just like Emera and Fortis, is that Enbridge is one of the most dominant stocks in an industry with incredibly high barriers to entry. Its pipeline network is already built, and it would be incredibly difficult and expensive for anyone to replicate it.
On top of that, a significant portion of its cash flow is backed by long-term contracts, which makes its revenue highly predictable.
That’s what makes it so similar to utility stocks. The business generates steady, reliable cash flow every day, which allows Enbridge to consistently invest in new projects while still increasing its dividend.
That’s why it’s no surprise that Enbridge’s dividend growth streak has lasted for more than three decades now, and the stock offers a current yield of more than 5.2%, showing why it’s one of the best dividend growth stocks to buy now.
