The best dividend stocks are the ones that are also growing. You get dividends that regularly increase because their earnings are also increasing. You get income that compounds and a share price that compounds. It’s a double-whammy win for investors, and a great recipe for strong total returns.
Two stocks that have really delivered growth and income are Canadian Natural Resources (TSX: CNQ) and AltaGas (TSX: ALA).
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Canadian Natural Resources: A cash machine for the decade
Canadian Natural has a near-unmatched record. It has grown its dividend for 26 consecutive years. It has grown that dividend by a 20% compounded annual growth rate (CAGR)!
For context, Canadian Natural’s dividend is up 9,900% over that time. Its stock is up 2,352% over that same period. Any investor who has held Canadian Natural stock for the past 26 years would be sitting on a 4,269% total return!
It is a tremendous track record that certainly supports the long-term thesis of holding this stock. The fact that Canadian Natural, an energy resources stock, is a testament to the quality of its business.
Today, Canadian Natural is the largest energy producer in Canada with 1.67 million barrels of oil equivalent (BOE) under production. It sits up there with the great energy majors of the world. With 15.9 billion BOE of reserves, it has decades of production that it can tap at minimal cost.
With a very low cost of production, the company is expected to generate a massive windfall from oil prices trading over $80 per barrel. It already has a strong balance sheet with only modest debt, so it has significant flexibility to reward shareholders (share buybacks, dividend increases, and special dividends).
Canadian Natural is not the cheapest energy stock. Its dividend yield has compressed to 3.7%. However, it is arguably one of the best Canadian companies. If you want outsized growth, quality, and income in an investment, this is one of the best stocks in Canada to hold long-term.
AltaGas: A utility stock for compounded income and growth
AltaGas has been a great stock for income, growth, and reliability. Its stock is up 111% in the past five years. Add in dividends, and it has delivered a 153% total return.
That is very attractive given it operates two very solid, predictable businesses.
It operates five regulated natural gas utilities in the northeastern United States. This area is benefiting from solid population growth and industrial power demand from data centres. AltaGas has enjoyed high single-digit compounded rate base growth over the past five years. It continues to aim for 8% annual rate base growth going forward.
Its midstream network is particularly interesting right now. Wars in the Middle East are driving up demand and pricing for Canadian liquefied petroleum gas (LPG). As Canada’s largest LPG exporter, AltaGas is enjoying very strong results today.
In fact, it raised its guidance to aim for 12% earnings before interest, tax, depreciation, and amortization (EBITDA) growth in 2026. With several growth projects set to come online in 2027, it should see a further boost in the next couple of years.
AltaGas stock yields 2.5% right now. It has a history of regularly increasing its dividend by a mid-single-digit rate. It continues to aim for 5-7% compounded annual dividend growth. This is a great stock if you want an attractive combination of resilient assets, long-term growth, and reliable income.
