Canadian Companies With a Track Record of Consistently Raising Their Dividends

Here’s why many of the best stocks to buy and hold for the long haul are Canadian companies that consistently increase their dividends.

Daniel Da Costa

Daniel joined the Motley Fool Canada team in 2019 with years of experience in banking and investing. Growing up the son of a proprietary stock trader and educator, Daniel’s always found joy in helping Canadians to improve their financial situations. With the Motley Fool, Daniel sees an even more rewarding way to impact Canadians positively. A student and great admirer of Warren Buffett, he’s always looking for investments offering growth at a reasonable price. Outside of finance, Daniel enjoys spending his time with family, sailing, and watching Formula One.

Published May 21, 3:45 pm EDT

When looking for Canadian dividend stocks, it’s easy to focus too much on yield.

After all, the higher the yield, the more income you’re generating right away. But while that matters, it’s often not the best way to identify high-quality long-term investments. In fact, looking at just the yield tells you almost nothing about the business itself.

So instead, one of the best signals of a strong business is its ability to consistently increase its dividend over time. Companies that raise their payouts year after year, especially through different economic environments, are often industry leaders with resilient operations, reliable cash flow, and management teams that continue to execute.

That consistency doesn’t happen by accident. For a company to keep increasing its dividend, it needs a business model that can hold up over time and generate dependable cash flow in the first place.

That’s why Canadian stocks with a long track record of dividend increases, such as Canadian National Railway (TSX: CNR), Canadian Tire (TSX: CTC.A), and Stella-Jones (TSX: SJ), are some of the best to buy and hold for the long haul.

Because in most cases, that consistency is a reflection of the underlying quality of the business, not just a decision to return more cash to shareholders.

Defensive businesses that consistently grow their earnings over the long haul

One of the most consistent patterns that you’ll notice with companies that consistently raise their dividends is that they operate in industries where demand is sticky.

For example, Canadian National Railway is one of the most important transportation businesses in North America, moving goods across the continent through a rail network that would be nearly impossible to replicate today.

That kind of infrastructure gives it a significant advantage. It allows the company to maintain pricing power, operate efficiently, and continue generating strong earnings even when economic conditions aren’t ideal.

And because its services are tied to long-term trade and economic activity, demand tends to hold up over time, which is why it’s been able to increase its dividend for three straight decades.

Meanwhile, Canadian Tire is one of the most recognizable brands in the country, with operations that go well beyond just one retail banner.

Between its core retail business, sporting goods, automotive, and financial services, it has multiple ways to generate revenue, cross-sell and stay relevant.

That diversification, as well as its industry-leading ecommerce platform and ultra-popular loyalty program, has helped it adapt through changing consumer trends and economic cycles.

And that ability to adjust over time is a big reason why it has been able to increase its dividend for 16 straight years.

A lesser-known Canadian dividend stock with long-term staying power

While some companies get most of the attention, others like Stella-Jones quietly deliver strong long-term performance without as much recognition.

Stella-Jones is intriguing because it operates behind the scenes, supplying products like utility poles, railway ties, and industrial wood that are essential for infrastructure across North America.

It’s not a flashy business, but it’s reliable because utilities and railways constantly need maintenance and replacement, which creates steady, ongoing demand for the products Stella-Jones supplies. That demand doesn’t disappear just because the economy slows down.

Furthermore, because the company operates in these essential areas, it has been able to grow steadily over time while increasing its dividend for 22 straight years.

The Foolish takeaway

Although dividend stocks can play an important role in your long-term portfolio, and the more income you earn, the better, the main goal shouldn’t be to find the highest yield available today.

Instead, it should be to find businesses that can continue performing, growing, and rewarding shareholders over the long haul. That’s why looking for companies that consistently increase their dividends can be so helpful when screening.

Because for a stock to raise its dividend year after year, it has to be doing something right. And if it’s consistently growing and expanding, chances are it’s creating shareholder value too.