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10 Canadian Dividend Aristocrats to Buy and Hold Forever

What is a Dividend Aristocrat?

Income investors often come across the term Dividend Aristocrat, but what exactly is it? In Canada, a Dividend Aristocrat is a company that doesn’t just pay a regular dividend but has increased its dividend every year for at least five consecutive years.

When such a company’s stock is listed on the TSX and has a market capitalization of more than $300 million, it qualifies as a Dividend Aristocrat stock. These criteria are important as they weed out risky penny and illiquid stocks.

There are nearly 80 Canadian Dividend Aristocrats today, with a couple even boasting a dividend growth streak of more than 40 years! Read along to know why you should invest in Dividend Aristocrats and the names of some of the top stocks you can buy.

Why you should own Dividend Aristocrats

Dividend-paying stocks have historically outperformed their non-dividend paying counterparts. Companies that consistently grow dividends, such as the Dividend Aristocrats, can generate even bigger returns thanks to dividend growth and reinvestment.

It isn’t about high dividend yields here. Dividend growth is a sign of fundamental strength as any company that can increase dividends year after year must have sustainable competitive advantages that generate healthy cash flows to support a higher payout regardless of business cycles.

That said, a 5-year period is a relatively short period to judge a dividend’s stability, so you could invest in stocks with longer dividend streaks. Here are 10 top Dividend Aristocrats you can buy and hold to build wealth.


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  1. Fortis Inc. (TSX:FTS)(NYSE:FTS)

Fortis is the only second publicly-listed stock in Canada with a 40-plus year record of dividend increases, or precisely 45 years. That dividend growth has massively boosted shareholder returns: Investors have earned total returns (stock price appreciation plus dividends) of more than 200% from Fortis shares in the past decade. Without those dividends, the stock would’ve earned only half as much.

Fortis’s incredible dividend track record can be credited to three factors: a defensive electricity and gas utility business, 94% revenues sourced from regulated assets, and prudent capital allocation. With a dividend yield of 3.6%, dividend payout ratio of below 75%, and targeted average annual growth of 6% in dividends between 2019 and 2023 makes Fortis a top Dividend Aristocrat to own.

  1. Canadian National Railway Company (TSX:CNR)(NYSE:CNI)

CNI investors have minted a lot of money thanks to its dividends: The Dividend Aristocrat has generated whopping total returns of 500% in the last decade. Without dividends, the stock would’ve returned 400% during the period.

CNI stock has increased its dividend every year since IPO in 1995 and grown it at a compound annual rate of 16% since. That’s huge for a cyclical business like railroads, but CNI has made the most of its leadership position, expansive three-coast linking network unlike any other North American railroad, and cost efficiency. With a dividend payout ratio of only 30% and a steady free-cash-flow trend, CNI should continue to reward income investors richly for years to come.


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  1. Bank of Montreal (TSX:BMO)(NYSE:BMO)

Bank of Montreal is among the ten largest banks by assets in North America and currently serves more than 12 million customers through a broad array of financial services. There’s one area where BMO stands above all companies in Canada: It is the only Canadian company that’s paid a dividend every year for as long as 190 years.

BMO was always a dividend growth company before it halted dividend increases during the 2008 financial crisis. It started raising dividends again from 2012 and has grown them at a solid compound annual growth rate (CAGR) of 7% since 2008. BMO’s capital ratios are well above banking regulatory requirement and it’s targeting 7-10% growth in adjusted earnings per share in the medium term. That, combined with a 4% yield, makes BMO a top Dividend Aristocrat.

  1. Franco-Nevada Corp (TSX:FNV)(NYSE:FNV)

Franco-Nevada is the rare gold stock to have grabbed a spot on the Dividend Aristocrat table. There’s a big reason behind it: Franco-Nevada is a streaming and royalty company, meaning it doesn’t mine metals but buys them from other miners at low prices in return for funding them upfront. In other words, Franco-Nevada also makes money from selling gold and other metals like mining companies but without the humongous costs and risks associated with mining. That means bigger margins even when metal prices are low.

Franco-Nevada has increased dividends for 11 consecutive years and yields 1.3%. You’d be surprised to know that including dividends, the stock has quadrupled in just ten years!  With the company also foraying into oil and gas royalties, Franco-Nevada is one of the “safest” commodity Dividend Aristocrats to own.


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  1. Brookfield Renewable Partners LP (TSX:BEP.UN)(NYSE:BEP)

Brookfield Renewable Partners is one heck of a dividend stock to bet on the massive renewable energy trend. It’s one of the largest pure-play renewables company globally and generates 76% power from hydroelectric (which means fewer competitors compared to solar and wind).

BEP has increased dividends every year since inception in 2011, growing it a CAGR of 6% since. The stock yields a massive 6.4% and has generated total returns of nearly 390% since 2011. Without dividends, its returns would’ve been only around 170% during the period. With management committed to growing dividends by 5-9% annually and generate 12-15% returns on equity in the long run, you could make boatloads of money with this Dividend Aristocrat.

  1. Alimentation Couche-Tard Inc (TSX:ATD.B)

Alimentation Couche-Tard is North America’s largest independent convenience store operator and is widely known for its flagship brand Circle K. Its worldwide store count was 12,700 in 2018 versus 8,500 in 2014. Couche-Tard has largely relied on acquisitions for growth and delivered well, having earned consistent double-digit returns on capital employed (ROCE) and strong free cash flows in recent years. Nine consecutive years of dividend increases may not have been possible otherwise.

Look beyond Couche-Tard’s yield of below 1% — its dividends have grown at a CAGR of 24% in the past five years, during which the stock more than doubled based on total returns. With management targeting at least 15% ROCE, this Dividend Aristocrat should continue to beat TSX in the long run.


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  1. Waste Connections Inc. (TSX:WCN)(NYSE:WCN)

Waste Connections is a great example of how lucrative boring businesses can be. Waste management isn’t really the kind of stock you’d consider investing in, but you’d be surprised to know that Waste Connections shares have risen more than sixfold in just 10 years thanks partly to dividends.

Waste Connections declared its first dividend in 2010 and has increased it every year since. Its dividends have grown at an average of 16% in the past five years. The defensive nature of its business, prudent capital allocation towards acquisitions and organic growth, and long-term commitment to grow dividends should keep income investors in this Dividend Aristocrat happy for years to come.

  1. Telus (TSX:T)(NYSE:TU)

Telus is one of the top telecom stocks to buy in Canada, partly because of its strong dividend history. Telus has increased its dividends for 15 straight years, with management committing to 7-10% annual dividend growth between 2017 and 2019. To see how much dividends matter, consider that Telus share price has appreciated around 230% in ten years and a whopping 400% including dividends during the same period.

Telus should continue rewarding shareholders beyond 2019 given its strong foothold in the industry, steady operational performance, and targeted long-term dividend payout of 65-75%. The stock had also yielded around 4% on an average in the past five years and currently yields a juicy 4.4%.


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  1. CAE Inc. (TSX:CAE)(NYSE:CAE)

If you haven’t heard about CAE, let alone know it’s a Dividend Aristocrat, I don’t blame you. CAE’s isn’t just any other business — it is the world leader in simulator and training services for civil aviation and defense forces. So the potential rise in global passenger traffic as well as defense spending bodes well for CAE, especially after the company expanded its footprint into medium- and- large- cabin aircraft platforms with its recent acquisition of Bombardier‘s aircraft training business.

CAE yields only 1.35% today but has increased dividends for eight consecutive years and grown it double-digits in recent years, which is why the stock has doubled in just five years. With the company’s backlog hitting records in both civil and defense segments in the last quarter, CAE is an interesting Dividend Aristocrat to add to your portfolio.

  1. Enbridge Inc (TSX:ENB)(NYSE:ENB)

Despite the cyclicality and unpredictability of the energy sector, Enbridge has proven its worth as a dividend growth stock. The energy infrastructure giant has increased dividends for 24 consecutive years, growing it a commendable CAGR of 11% over the period.

That impressive streak can be credited to Enbridge’s relatively low-risk business model versus most oil and gas companies — it earns 98% income from regulated or fixed fee contracts. That means even with a conservative target dividend payout of 65% or below, Enbridge investors can expect good dividend hikes year after year and enjoy solid yields that have averaged roughly 4.4% in ten years. Enbridge’s current yield of 6%, in fact, makes it an even more compelling Dividend Aristocrat to buy and hold.


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Preserve and build capital with Dividend Aristocrats

Some investors believe that only companies in defensive businesses can pay steady dividends. This list of 10 Canadian Dividend Aristocrats, however, debunks the myth as it includes companies from diverse sectors, including cyclical ones like energy.

Whether you’re just beginning to invest in stocks or have been at it for years, it’s never too late to buy some Dividend Aristocrat stocks given their dividend growth potential. Dividend investing, in fact, is one of the easiest ways to benefit from the power of compounding money, and no stocks do it better than Dividend Aristocrats.

Fool contributor Neha Chamaria has no position in any of the stocks mentioned.

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