There are some pretty strong dividend growers out there that just keep raising the bar on their dividends. Indeed, at a time when wage growth is quite stagnant, getting a raise to stay ahead of inflation is becoming a daunting task. With a bit of help from some of the better Canadian dividend growth gems, though, one can not only keep up as the costs of living continue to soar, but also grow one’s wealth in real terms.
In this piece, we’ll look at a pair of strong stocks that recently raised their dividends and are poised to keep doing more of the same as free cash flows continue to swell over the years.
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Enbridge
Enbridge (TSX: ENB) is on a multi-decade dividend growth streak, and one that could not only extend, but get a heck of a lot more generous, especially now that tailwinds are at the firm’s back.
With very promising crude and natural gas pipelines generating tons of cash and highly predictable projects that will keep coming online, perhaps there is no sleep-well dividend grower out there. Despite the momentum and very generous dividend growth trajectory, the upfront yield remains incredibly high at 5%.
As demand for energy transportation surges in the coming years, I’d look for Enbridge’s expansion to keep going strong, with the potential for acceleration that could lead to more of the same for investors: huge dividend growth and steady appreciation.
For investors looking for a less nauseating way to bet on energy, the midstream juggernaut stands out. It’s in a great spot as it looks to capture growth while also producing utility-like cash flows for investors. Enbridge might be an obvious income pick, but it’s a go-to for a reason. It’s a very high-quality business that’s starting to get the attention of investors outside of Canada, if not for the income, for the risk/reward and potential for outsized total returns.
Alimentation Couche-Tard
Alimentation Couche-Tard (TSX: ATD) is a dividend grower and earnings appreciation story that income investors might not reach for at a time like this. The dividend, currently yielding 0.95%, looks unremarkable on the surface. But when you consider how quickly the payout is growing, it becomes more apparent that shares are in a sweet spot for young investors who not only want to achieve capital gains but also set their future selves up with a fast-growing, rich cash flow stream.
With a wealth of M&A options, seriously impressive tech that can drive sales while driving labour costs lower (think easy checkout like that featured at Couche-Tard’s McGill location in Montréal), Couche-Tard is one of those sleepy names to stash away before the earnings get rolling again. After a strong quarter that shocked many, I think Couche-Tard may very well be one of the most undervalued and underrated growers hiding in plain sight.
After hiking the dividend by just over 10%, Couche-Tard has all the makings of a truly sensational growth story. Even if Couche-Tard can’t find M&A deals, I do think that the firm could get serious about returning that capital to shareholders via buybacks and double-digit percentage dividend hikes for years to come. I’d rather have a 1%-yielder with huge dividend growth and a predictable earnings growth story, like Couche-Tard, than a stagnant 3%-yielder that’s growing in the low single digits.
