Dividend stocks can be powerful tools for long-term wealth creation, as they offer a steady stream of passive income, enable compounding through reinvestment, and help reduce overall portfolio volatility. However, since dividends are not guaranteed, investors should prioritize companies with strong fundamentals, a consistent track record of dividend payments, and solid growth prospects.
Against this backdrop, let’s explore two Canadian dividend stocks that investors can consider buying and holding over the next five years to reap superior returns.
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Fortis
Fortis (TSX: FTS) is an electric and natural gas utility company that operates nine regulated utilities across Canada, the United States, and the Caribbean, serving approximately 3.5 million customers. With a largely regulated asset base and the majority of its operations focused on low-risk transmission and distribution, its financial performance tends to be relatively resilient to market volatility. Supported by this stable business model, the company has increased its dividend for 52 consecutive years and currently offers a forward yield of around 3.27%.
Additionally, electricity demand continues to rise, driven by economic growth, the electrification of transportation, and increasing investments in AI-ready data centres. This trend could support demand for Fortis’s services. To capitalize on these opportunities, the company is advancing its $28.8 billion capital investment plan, which could grow its rate base at a 7% compound annual rate to $57.9 billion by 2030. At the same time, Fortis is implementing preventive maintenance strategies and efficiency initiatives to control costs and improve margins.
Given these favourable growth drivers, management expects to increase its dividend by 4–6% annually through the remainder of the decade. Given its regulated business model, consistent dividend growth track record, and strong visibility into future expansion, Fortis appears well-positioned to sustain dividend growth, making it an attractive option for long-term investors.
Enbridge
Another dividend-paying stock that appears well-suited for long-term investors is Enbridge (TSX: ENB). The company operates a diversified energy infrastructure portfolio, including a contracted midstream business, regulated utility assets, and renewable energy projects backed by long-term power-purchase agreements. Notably, about 98% of its earnings come from take-or-pay contracts and regulated assets, while roughly 80% of its cash flows are indexed to inflation. This structure makes its financial performance relatively resilient to commodity price swings and economic cycles, enabling stable and predictable results.
Supported by these reliable cash flows, Enbridge has paid dividends for over 70 consecutive years and increased its payout for 31 straight years. It currently pays a quarterly dividend of $0.97 per share, yielding approximately 5.18%.
Looking ahead, oil and natural gas could remain key components of the global energy mix in the coming years, even as the transition toward cleaner energy continues. At the same time, rising production and consumption in North America are driving demand for Enbridge’s infrastructure. To capitalize on these trends, the company has identified $50 billion in growth opportunities and plans to invest $10–$11 billion annually to advance these projects. Management expects adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization), distributable cash flow per share, and adjusted earnings per share to grow at a low- to mid-single-digit pace through the rest of the decade.
Enbridge’s financial position also remains solid, with approximately $10.8 billion in liquidity and a reasonable net-debt-to-adjusted EBITDA ratio of 4.8. Given its stable business model, strong cash flow generation, and a visible growth pipeline, Enbridge appears well-positioned to sustain dividend growth, making it an attractive option for income-focused investors.
