2 Dividend Stocks to Hold for the Next 5 Years

Given their resilient business models, strong financial positions, consistent dividend payouts, and attractive growth prospects, these two dividend stocks are excellent additions to your long-term portfolio.

Key Points
  • TC Energy offers a forward yield of 3.52% and plans significant investments to expand its pipeline network, positioning itself for stable growth supported by rate-regulated assets and long-term contracts.
  • Bank of Nova Scotia provides a forward yield of 3.72%, benefits from diverse revenue streams, and is focusing on high-margin North American operations, enhancing its long-term earnings stability and growth prospects.

Dividend stocks can be powerful tools for long-term wealth creation, as investors benefit from both regular income and capital appreciation. Additionally, reinvesting dividends allows investors to harness compounding, helping them achieve their long-term financial goals more quickly.

Companies that pay dividends often operate established businesses with resilient business models and reliable cash flows, enabling them to maintain consistent payouts over time. As a result, these stocks tend to be more resilient during periods of economic uncertainty and can help stabilize an investment portfolio.

Against this backdrop, here are two quality dividend stocks that I believe are stellar additions to portfolios with five-year or longer investment horizons.

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TC Eenergy

TC Energy (TSX: TRP) is a diversified energy infrastructure company that operates a 93,300-kilometre pipeline network that transports natural gas across North America. It also owns a portfolio of power generation assets totalling 4.7 gigawatts, with most of the electricity produced sold under long-term power purchase agreements. This contractual structure helps shield the company’s financial performance from fluctuations in spot electricity prices.

Overall, approximately 98% of TC Energy’s earnings are generated from rate-regulated assets and take-or-pay contracts, supporting stable cash flows and consistent financial performance. Amid consistently strong financial performance, the company has delivered a total shareholder return of roughly 770% over the last 20 years, representing an annualized return of 11.4%. In addition, TC Energy boasts an impressive dividend record, having increased its dividend for 26 consecutive years, while currently offering an attractive forward yield of 3.5%.

Looking ahead, TC Energy is well-positioned to benefit from rising natural gas production and growing demand across North America, which should drive higher utilization of its infrastructure network. To capitalize on these trends, the company plans to invest approximately $6 billion annually through the end of the decade to expand its asset base and strengthen its pipeline network.

Supported by these investments, management expects adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) to grow at an annualized rate of 3% to 5% through 2028. Given its regulated business model, proven dividend track record, and visible growth opportunities, TC Energy appears to be an attractive long-term investment for income-focused investors.

Bank of Nova Scotia

Another dividend stock I believe is a prime buy right now is Bank of Nova Scotia (TSX: BNS), which has paid uninterrupted dividends since 1833. The bank operates across multiple countries and offers a diversified range of banking and financial services. Supported by its diverse revenue streams, BNS generates stable and reliable cash flows, enabling it to reward shareholders with consistent dividend payments. The bank has increased its dividend at an annualized rate of 4.5% over the last decade and currently offers an attractive forward yield of 3.7%.

Moreover, persistent inflation could encourage central banks to maintain higher interest rates for longer, thereby supporting BNS’s core lending business by expanding net interest margins. At the same time, the bank is reshaping its portfolio by focusing on lower-risk, higher-margin North American operations while reducing its exposure to riskier and lower-margin Latin American markets. This strategic shift should improve earnings stability and strengthen the consistency of its cash flows over the long term.

BNS is also pursuing growth opportunities, including its plan to acquire the remaining shares of Scotia Group Jamaica Limited that it does not already own. Management expects to complete the approximately $0.5 billion transaction by the end of this year. In addition, the bank is continuing its share repurchase program, which could reduce its outstanding share count by up to 15 million shares through April 2027, enhancing shareholder value.

Given its resilient business model, strong financial position, and attractive growth prospects, I believe BNS is a compelling long-term investment for income-focused investors.

Fool contributor Rajiv Nanjapla has no position in any of the stocks mentioned. The Motley Fool recommends Bank of  Nova Scotia. The Motley Fool has a disclosure policy.

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