The Top 10 Dividend Growth Stocks in Canada

Don’t skip over stocks like Enbridge Inc (TSX:ENB)(NYSE:ENB), Imperial Oil Limited (TSX:IMO)(NYSEMKT:IMO), and Canadian National Railway Company (TSX:CNR)(NYSE:CNI) because of their small yields.

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Imagine if you had bought these stocks 20 years ago.

If you had, today you would be earning yields of 53%, 64%, even 90%. And that’s from blue-chip companies like Atco Ltd. (TSX:ACO.X) and Enbridge Inc (TSX:ENB)(NYSE:ENB).

Unfortunately, few people will ever earn yields like these. They want income now. But because of their impatience, most investors are missing out on some of the market’s top income opportunities.

How to earn a 90% yield… from Enbridge?

When most investors are evaluating a stock, there’s only one metric they consider: yield.

Does this sound like you? For most folks, size matters. If a stock doesn’t offer an attention-grabbing payout, they’re not interested.

Now, don’t get me wrong. Yield is important. A higher payout puts more cash in your pocket. And for those of us in retirement, income today may be a top priority.

But yield isn’t the only factor to consider. There’s another metric, equally important, that most investors overlook: dividend growth.

Given enough time, even an income trickle can transform into a raging river of cash flow. Growing payouts also ensure our income stream can keep up with rising prices. 

Take Enbridge, for example. Today, the stock pays a tidy 3.2% yield. That’s okay, but it certainly won’t knock your socks off.

It’s only when you look at the company’s payout over decades that you really appreciate this business. Since 1995, Enbridge has increased its dividend by 644%. If you had bought and held the stock over that time, while reinvesting all of your distributions, the yield on your original investment would be 89.5% today.

The same goes for Empire Company Limited (TSX:EMP.A) and Canadian Natural Resources Limited (TSX:CNQ)(NYSE:CNQ). If you’d bought these stocks back in 1995, your shares would now be yielding over 31% and 49% today respectively.

That’s the power of dividend growth in action. Of course, this leaves one obvious question. How do you know if a company is going to increase its payout?

I’ve found it’s best to look at firms that already have a strong dividend growth track records. After all, if a company has a history of hiking its payout year after year, then clearly management is committed to rewarding shareholders.

With that in mind, here are the top 10 Canadian companies with the longest records of consecutive dividend increases.

Company Yield 20-Year Yield on Cost Years Of Dividend Increases
Fortis Inc 3.4% 40.4% 42
Canadian Utilities Limited 2.8%  – 42
Canadian Western Bank 2.9% 41.8% 23
Atco Ltd  2.5% 64.9% 21
Empire Company Limited  1.2% 31.5% 20
Imperial Oil Limited 1.8% 12.3% 20
Metro Inc  4.0% 53.3% 20
Canadian National Railway Company 1.5% 34.2%* 19
Enbridge Inc 3.2% 89.5% 19
Canadian Natural Resources Limited 2.5% 49.7% 14

Source: Yahoo Finance  *Since November 22, 1996

As you can see above, each company on this list has hiked its payout annually for at least a decade. Clearly, the market likes this kind of behavior. Almost every stock on this list crushed the S&P/TSX Composite Index over the last 20 years.

The real story is what those dividend hikes have done for income investors. Just look at the yields you’d currently be earning if you had bought these stocks 20 years ago.

After two decades of payout increases, each one of these stocks offers an attractive yield. The top name on the list—Fortis Inc (TSX:FTS)—has a yield on cost of 40%. And that’s from an $11 billion company.

That just goes to show what dividend growth can do for your portfolio. Given enough time, even the market’s smallest yielders can turn into cash-cranking machines.

The No. 1 mistake dividend investors make

Of course, there are no sure things in investing. Just because a company has hiked its payout for 20 consecutive years doesn’t mean you can count on dividend increases for the next 20 years.

But the lesson here is simple—if you’re ignoring dividend growth, then you could be missing out on some of the market’s best income opportunities.

Should you invest $1,000 in Canadian National Railway right now?

Before you buy stock in Canadian National Railway, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Canadian National Railway wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $20,697.16!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*.

See the Top Stocks * Returns as of 3/20/25

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Robert Baillieul has no position in any stocks mentioned. David Gardner owns shares of Canadian National Railway. The Motley Fool owns shares of Canadian National Railway. Canadian National Railway is a recommendation of Stock Advisor Canada.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Dividend Stocks

TFSA (Tax-Free Savings Account) on wooden blocks and Canadian one hundred dollar bills.
Dividend Stocks

Here’s Exactly How a $20,000 TFSA Could Potentially Grow to $200,000

Index funds like the iShares S&P/TSX Capped Composite Index (TSX:XIC) are tax free in a TFSA.

Read more »

Dividend Stocks

How I’d Invest $6,000 in Canadian Real Estate Stocks to Build Lasting Wealth

Canadian REITs on sale! See how grocery-anchored retail properties offering 9% yields could turn $6,000 into lasting wealth despite US…

Read more »

rain rolls off a protective umbrella in a rainstorm
Dividend Stocks

Economic Headwinds: Should You Still Consider Buying the Dip?

A market dip might seem like a bumpy road, but it can be far smoother in the future with the…

Read more »

e-commerce shopping getting a package
Dividend Stocks

Consumer Spending Plays Amidst the Current Market Dip

Consumption may go down in market dips, but certain consumer stocks are certainly better off than others.

Read more »

Asset Management
Dividend Stocks

12% Dividend Yield! I’m Buying This TSX Stock and Holding for Decades

Stocks with high-dividend yields carry risks. But they could be a good long-term investment. Here is a 12% dividend stock…

Read more »

Canadian flag
Dividend Stocks

How I’d Build a Foundation of Canadian Value Stocks in My Investment Strategy

Canadian investors can explore iShares Canadian Value Index ETF for value stock ideas to build a foundation for their diversified…

Read more »

Canadian dollars are printed
Dividend Stocks

How I’d Transform a $30,000 TFSA Into a Cash-Flow Machine

Here's why TFSA investors should consider owning dividend stocks such as Mullen Group in 2025.

Read more »

A woman shops in a grocery store while pushing a stroller with a child
Dividend Stocks

Dip Buyers Could Win Big in Today’s Market Dip

If you want to buy the dip, think long-term. Which is why this TSX stock is a top option.

Read more »