Dividend stocks with a growing payout can help investors significantly increase yield-at-cost while also creating a passive income stream.
So, it’s essential to identify businesses with a growing cash flow base and a sustainable payout ratio, which help them maintain and raise dividends across business cycles.
A high yield can be a trap. If a company is paying out more than it earns, that dividend is unsustainable and living on borrowed time. The stocks worth owning for a decade are the ones growing revenue and profit fast enough to support a rising payout, year after year.
TC Energy (TSX: TRP) and Killam Apartment (TSX: KMP.UN) are two such Canadian dividend stocks that should be on your watchlist right now.
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Is this TSX dividend stock a good buy?
TC Energy is an energy infrastructure company that offers you a yield of over 4%. In Q2, the pipeline giant reported comparable EBITDA (earnings before interest, tax, depreciation, and amortization) growth of 12% year over year. Management expects EBITDA in 2026 to be $11.7 billion, given its midpoint forecast.
The company has sanctioned roughly $3 billion in new growth projects so far this year at an average return of about 12%, and it has another $7 billion in late-stage projects in approval, plus over $20 billion more in advanced stages.
Demand for natural gas across North America is now expected to grow by 51 billion cubic feet per day by 2035, driven largely by power generation and data centres, making TC Energy a top dividend stock to own right now.
CEO Francois Poirier summed up the company’s approach on the call, stating.
Our confidence is driven not only by the scale of the opportunities we see ahead, but by our ability to consistently execute
The combination of a massive project pipeline and a track record of delivering on budget is what supports a dividend for the long haul.
Killam is a top dividend-paying REIT
Killam Apartment REIT owns apartment buildings across Canada, with significant exposure to markets in Atlantic Canada, particularly Halifax.
In the second quarter, Killam delivered 3.8% same-property apartment revenue growth and 4.6% same-property NOI (net operating income) growth in its apartment portfolio.
Occupancy improved to 97.6% in Q2, up from 97% in the prior quarter. In Halifax specifically, same-property apartment revenue jumped 6.3% and NOI climbed 7%.
Halifax is home to Canada’s largest military base by personnel, and the region is set to receive roughly $2 billion in defence-related investment, with billions more flowing into shipbuilding contracts tied to Canada’s submarine program.
Executive Vice President Robert Richardson made the point plainly on the call. “We view Atlantic Canada as a differentiated competitive advantage within Killam’s portfolio,” he said, pointing to more than 5,700 apartment units the trust owns in Halifax.
Total debt as a percentage of assets sat at 42.8% at quarter end and improved to 42.2% after the company sold a portfolio of Ontario manufactured home communities for gross proceeds of $50.9 million.
Management used part of the proceeds to buy back 1.7 million trust units during the quarter, suggesting leadership sees its own stock as undervalued.
The case for holding both for the next decade
TC Energy gives investors exposure to a multi-decade wave of natural gas demand tied to electricity and data centre growth, with a project backlog that stretches well past 2030.
Killam offers investors a direct line into one of the tightest rental markets in the country, backed by defence spending that is beginning to show up in local economies.
Neither stock is without risk.
TC Energy carries meaningful debt and must fund a growing capital program over the next few years. Killam faces near-term drag from a large office tenant vacancy at its Westmount Place property, though management expects that redevelopment to start contributing to earnings in 2028.
Even so, I believe both companies have the assets, demand backdrop, and disciplined management teams needed to keep growing distributions over the next 10 years.
