Retirees and other dividend investors are searching for good stocks to add to their self-directed Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) portfolio focused on income and long-term total returns.
The TSX is near its record high at the same time that storm clouds could be brewing for the economy amid ongoing tariff uncertainty and soaring oil prices. In this environment, it makes sense to consider stocks that can continue to deliver dividend growth through a downturn.
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Fortis
Fortis (TSX: FTS) raised its dividend in each of the past 52 years. That’s the kind of dividend-growth reliability investors want to see when picking new stocks for a buy-and-hold portfolio.
A quick look at the long-term chart also indicates that steady dividend growth tends to lead to decent gains in the share price.
Fortis gets nearly all of its revenue from rate-regulated businesses, including natural gas distribution utilities, power-generation facilities, and electricity transmission networks. Households and companies need power and natural gas regardless of the state of the economy, so Fortis should be a good stock to own during a recession.
Fortis is working on a $28.8 billion capital program that will increase the rate base by about 7% per year over the medium term. Revenue and cash flow growth coming from the new assets as they are completed and go into service should support planned annual dividend increases of 4% to 6% through 2030.
Canadian Natural Resources
Wars in Ukraine and Iran have triggered a wave of interest in Canadian oil and natural gas as countries around the globe scramble to secure reliable energy supplies. At the same time, the current Canadian government appears to be open to supporting the construction of new pipeline capacity to meet this rising demand for Canadian energy, while also shifting from reliance on the United States for oil and gas sales.
Canadian Natural Resources (TSX: CNQ) is a major producer of both oil and natural gas. The company has vast reserves, including oil sands, conventional heavy and light oil, offshore oil and natural gas. CNRL has the balance sheet strength to make large strategic acquisitions and can cover the dividend during times when energy prices decline.
In fact, CNRL has increased the dividend for 26 consecutive years.
Near-term volatility is expected, but the stock currently offers a 4% dividend yield that pays investors well to ride out turbulence.
Enbridge
Enbridge (TSX: ENB) is best known for its oil and natural gas pipeline networks, but the company is also the largest operator of natural gas utilities in North America. In addition, Enbridge has an oil export terminal in Texas and is a partner on the Woodfibre liquified natural gas (LNG) export facility being built in British Columbia. Finally, Enbridge’s wind and solar assets round out the portfolio.
Enbridge is working on a $39 billion capital program that will boost revenue and cash flow. This should enable steady dividend growth. Enbridge raised the dividend in each of the past 31 years. At the time of writing, the stock provides a dividend yield of 5.3%.
The bottom line
Fortis, CNRL, and Enbridge pay good dividends that should continue to grow. If you have some cash to put to work, these stocks deserve to be on your radar.
