Dividend stocks are typically well-established companies that return a portion of their earnings to shareholders through regular dividend payments. As a result, investors can benefit from a combination of long-term capital appreciation and steady passive income. Furthermore, by reinvesting these dividends, investors can harness compounding to enhance their long-term return potential.
Thanks to their mature business models, stable cash flows, and consistent payouts, dividend-paying companies are generally less vulnerable to market volatility, helping provide greater stability to investment portfolios. Historically, dividend stocks have also outperformed non-dividend-paying stocks over the long term, making them an attractive option for long-term investors.
Against this backdrop, let’s explore two high-yield Canadian dividend stocks that investors could consider buying and holding for decades to generate reliable passive income and potentially achieve superior long-term returns.
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Enbridge
Enbridge (TSX: ENB) is a diversified energy infrastructure company with operations spanning contracted midstream assets, regulated utility businesses, and renewable power facilities backed by power purchase agreements (PPAs). Approximately 98% of its earnings come from long-term contracts and regulated assets, and nearly 80% of those earnings are protected against inflation. As a result, Enbridge’s financial performance is relatively resilient to economic cycles, market volatility, and commodity price fluctuations. Supported by its stable cash flows and reliable operations, the company has paid dividends uninterruptedly for more than 70 years. It has also increased its dividend for 31 consecutive years and currently offers an attractive forward yield of 5%.
Looking ahead, oil and natural gas could remain essential components of the global energy mix despite the accelerating transition toward cleaner energy sources. At the same time, growing oil and natural gas production across North America continues to support demand for Enbridge’s extensive infrastructure network and energy transportation services. Benefiting from these favourable industry trends, the company is advancing its $40 billion secured capital investment program, with projects expected to enter service through 2030. Supported by these growth initiatives, management expects adjusted earnings per share and distributable cash flow per share to increase at an annualized rate of approximately 5% over the coming years.
In addition to its growth pipeline, Enbridge maintains a strong financial position, with $10.8 billion in available liquidity. Given its resilient business model, clear growth opportunities, and healthy balance sheet, I believe the company is well-positioned to continue delivering steady dividend growth in the years ahead.
SmartCentres Real Estate Investment Trust
Another high-yield dividend stock to consider buying and holding for the long term is SmartCentres Real Estate Investment Trust (TSX: SRU.UN). The REIT owns and operates approximately 200 strategically located properties across Canada, with nearly 90% of Canadians living within 10 kilometres of at least one of its properties. It also benefits from a strong tenant base, with most tenants having a regional or national presence, and approximately 60% providing essential services. As a result, SmartCentres maintains healthy occupancy levels regardless of broader economic conditions.
Along with healthy occupancy rates, SmartCentres’s consistent lease renewals, ongoing lease-up activity, and rising rental rates have delivered stable financial performance and reliable cash flows. This strength has enabled it to deliver attractive monthly distributions to investors. Currently, the REIT pays a monthly distribution of $0.15417 per unit, yielding 6.6% on a forward basis.
Looking ahead, demand for retail space in Canada remains healthy amid economic growth and constrained supply, driven by elevated construction costs, creating a favourable operating environment for SmartCentres. To capitalize on these opportunities, the REIT continues to expand its portfolio, with approximately 0.8 million square feet of projects currently under construction across the retail, residential, self-storage, office, and industrial segments. In addition, the company has another 87 million square feet of projects in various stages of planning and development, providing significant visibility into long-term growth.
Given its resilient tenant base, dependable cash flows, and substantial development pipeline, I believe SmartCentres is well-positioned to continue rewarding unitholders with attractive monthly distributions.
