Dividend investing may seem slower than investing for share-price appreciation, but dividend-growth stocks offer an appealing advantage: the potential to generate an increasingly substantial stream of income over time via a compounding effect. Although investors must periodically review their portfolios, quality dividend stocks can reward patience without requiring constant trading.
The secret is the combination of starting yield, dividend growth, and time. Three Canadian stocks illustrate how modest income today could become considerably more meaningful over several decades.
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Enbridge: Start with a higher yield
Enbridge (TSX: ENB) offers a starting dividend yield of approximately 5.7%. Assuming annual dividend growth of 3%, an initial investment generating $100 in first-year dividends would produce about $130 in year 10, $175 in year 20, and $236 in year 30.
Enbridge has increased its dividend for about 30 years, with recent hikes around 3%. Faster growth could be possible if its distributable cash flow expands more quickly, although investors should not count on it.
Enbridge illustrates the appeal of a higher starting yield. Investors receive meaningful income immediately, while annual increases gradually boost the income generated by their original investment.
| Enbridge | Empire | BAM | ||||
| Year | Yield on cost | Income (+3%/yr) | YOC | (+7%/yr) | YOC | (+9%/yr) |
| 1 | 5.70% | $100 | 2.00% | $100 | 4.40% | $100 |
| 2 | 5.87% | $103 | 2.14% | $107 | 4.80% | $109 |
| 3 | 6.05% | $106 | 2.29% | $114 | 5.23% | $119 |
| 4 | 6.23% | $109 | 2.45% | $123 | 5.70% | $130 |
| 5 | 6.42% | $113 | 2.62% | $131 | 6.21% | $141 |
| 6 | 6.61% | $116 | 2.81% | $140 | 6.77% | $154 |
| 7 | 6.81% | $119 | 3.00% | $150 | 7.38% | $168 |
| 8 | 7.01% | $123 | 3.21% | $161 | 8.04% | $183 |
| 9 | 7.22% | $127 | 3.44% | $172 | 8.77% | $199 |
| 10 | 7.44% | $130 | 3.68% | $184 | 9.56% | $217 |
| 11 | 7.66% | $134 | 3.93% | $197 | 10.42% | $237 |
| 12 | 7.89% | $138 | 4.21% | $210 | 11.35% | $258 |
| 13 | 8.13% | $143 | 4.50% | $225 | 12.38% | $281 |
| 14 | 8.37% | $147 | 4.82% | $241 | 13.49% | $307 |
| 15 | 8.62% | $151 | 5.16% | $258 | 14.70% | $334 |
| 16 | 8.88% | $156 | 5.52% | $276 | 16.03% | $364 |
| 17 | 9.15% | $160 | 5.90% | $295 | 17.47% | $397 |
| 18 | 9.42% | $165 | 6.32% | $316 | 19.04% | $433 |
| 19 | 9.70% | $170 | 6.76% | $338 | 20.76% | $472 |
| 20 | 9.99% | $175 | 7.23% | $362 | 22.62% | $514 |
| 21 | 10.29% | $181 | 7.74% | $387 | 24.66% | $560 |
| 22 | 10.60% | $186 | 8.28% | $414 | 26.88% | $611 |
| 23 | 10.92% | $192 | 8.86% | $443 | 29.30% | $666 |
| 24 | 11.25% | $197 | 9.48% | $474 | 31.93% | $726 |
| 25 | 11.59% | $203 | 10.14% | $507 | 34.81% | $791 |
| 26 | 11.93% | $209 | 10.85% | $543 | 37.94% | $862 |
| 27 | 12.29% | $216 | 11.61% | $581 | 41.36% | $940 |
| 28 | 12.66% | $222 | 12.43% | $621 | 45.08% | $1,025 |
| 29 | 13.04% | $229 | 13.30% | $665 | 49.14% | $1,117 |
| 30 | 13.43% | $236 | 14.23% | $711 | 53.56% | $1,217 |
Empire: A lower yield with faster growth
Empire Company (TSX: EMP.A), the owner of grocery businesses including Sobeys, illustrates a different income and growth profile. With a starting yield of about 2% and assumed annual dividend growth of 7%, an investment generating $100 in first-year dividends would produce approximately $184 in year 10, $362 in year 20, and $711 in year 30.
Although Empire’s initial yield is lower, faster dividend growth could eventually translate into substantially greater income.
This highlights an important lesson: the highest-yielding stock is not necessarily the best long-term dividend investment. Companies that grow earnings and cash flow may have greater capacity to increase their dividends. However, the 7% growth rate here is merely an illustration, not a guarantee.
Brookfield Asset Management: A nice mix of income and growth
Brookfield Asset Management (TSX: BAM) combines a starting yield of approximately 4.4% with management targeting dividend growth of about 15%. Our more conservative scenario assumes annual dividend growth of 9%. Under this projection, an investment generating $100 in first-year dividends would produce about $217 in year 10, $514 in year 20, and $1,217 in year 30.
The alternative asset manager is growing via fundraising (US$98 billion in the first half of 2026), integration of strategic credit platforms (i.e., Oaktree), and major expansions into AI-driven infrastructure and private credit.
Even without assuming exceptionally rapid growth, the projection demonstrates how time can transform dividend income. The analyst consensus price target suggests the stock may be trading at a discount of around 15%.
The bottom line: Time is a dividend investor’s ally
These examples show how $100 in annual dividends could grow to $236 with Enbridge, $711 with Empire, or $1,217 with Brookfield Asset Management over 30 years, assuming annual dividend growth of 3%, 7%, and 9%, respectively.
These simplified scenarios assume dividend growing at a constant rate and no additional share purchases. They exclude taxes and inflation and do not account for dividend reinvestment, which could accelerate income growth by purchasing additional shares that increase dividends.
Ultimately, successful dividend investing is not simply about chasing the highest yield. It is about managing risk and selecting financially resilient businesses with sustainable payouts and long-term growth potential.
By starting early, remaining patient, and reinvesting dividends when appropriate, investors can give compounding more time to work and potentially turn modest income into a substantial future cash flow.
