Canadian investors are searching for good TSX dividend stocks to add to their self-directed Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) portfolio focused on generating income and long-term total returns.
With markets near record levels and trade uncertainty threatening the economy, it makes sense to consider companies that can deliver steady dividend growth through the full economic cycle.
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Fortis
Fortis (TSX: FTS) is a good example of a top TSX dividend-growth stock that investors can buy and sit on for years.
The company owns utility businesses across Canada and in the United States, with nearly all of the revenue coming from rate-regulated assets. These operations include power generation facilities, natural gas distribution utilities, and electricity transmission grids that provide essential power services.
Fortis continues to expand its portfolio with a current $28.8 billion capital program that is expected to boost the rate base from $42 billion to nearly $58 billion over five years. As the new assets are completed and begin to earn revenue, the increase in cash flow should enable Fortis to meet its target of 4% to 6% annual dividend increases through 2030. Fortis raised the distribution in each of the past 52 years.
Enbridge
Enbridge (TSX: ENB) has increased its dividend for 31 consecutive years. The stock is up about 26% in the past 12 months, but still offers new investors a dividend yield of close to 5% today.
Enbridge is benefiting from its strategy pivot over the past few years that saw the company allocate growth investments to emerging opportunities in the North American energy sector, particularly in the United States. Management spent US$3 billion to buy an oil export facility in Texas and another US$14 billion to acquire three American natural gas utilities. Enbridge is also a partner on the Woodfibre liquefied natural gas (LNG) export facility nearing completion on the coast of British Columbia.
Enbridge’s capital program currently sits at $40 billion. Revenue growth from the new assets is expected to deliver annual increases in distributable cash flow of about 5% over the medium term. This should support ongoing dividend hikes.
Canadian Natural Resources
Canadian Natural Resources (TSX: CNQ) can be a volatile stock. The share price currently sits near $64, but has traded in a range of $40 to $70 over the past 12 months, with sharp moves occurring in recent months caused by the war in Iran and the closure of the Strait of Hormuz.
Investors should ignore the near-term turbulence and focus on the long-term opportunity for CNRL. The company is a major Canadian energy producer with assets that include oil sands, conventional light and heavy oil, offshore oil, and natural gas operations. CNRL has the financial clout to make strategic acquisitions while also expanding production through capital investments. New oil and natural gas export capacity will enable CNRL to sell more product to international buyers.
CNRL raised the dividend in each of the past 26 years.
The bottom line
Fortis, Enbridge, and CNRL pay good dividends that should continue to grow. If you have some cash to put to work in a portfolio focused on dividends, these stocks deserve to be on your radar.
