3 TSX Dividend Growth Stocks to Buy Now

This group of dividend-growth streakers, including Inter Pipeline (TSX:IPL), can help build your wealth in 2020.

| More on:

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

Hello, Fools! I’m back to highlight three top dividend growth stocks. As a quick reminder, I do this because businesses with consistently increasing dividend payouts can guard against the harmful effects of inflation by providing a rising income stream and tend to outperform the market averages over the long haul.

The three stocks below offer an average dividend yield of about 5.4%. So if you’re looking to add a big of chunk of growing income to your 2020 (that the CRA can’t touch), this trio of stocks might be perfect for your TFSA.

Green monster

Leading off our list this week is financial services giant Toronto-Dominion Bank (TSX:TD)(NYSE:TD), which has grown its dividend by an impressive 50% over the past five years.

TD’s massive scale (over 2,300 retail locations in North America), strong regulatory environment, and reliable capital returns (in the form of share repurchases and dividends) should continue to keep shareholders happy. In 2019, EPS increased to $6.25 from $6.01 as revenue improved to $41.1 billion from $38.9 billion.

More important, adjusted return on equity for the year clocked in at a solid 15.6%, suggesting that TD’s competitive strength remains solid.

“Throughout the year, we generated earnings growth amidst a challenging macroeconomic environment while we made strategic investments to strengthen our business, deliver for our customers, and modernize and simplify our operations,” said CEO Bharat Masrani.

TD shares currently offer a healthy dividend yield of 4.0% and trade at a cheapish forward P/E of 10.

Down the pipe

Next up, we have pipeline giant Inter Pipeline (TSX:IPL), whose dividend has grown at a steady clip of 25% over the past five years.

Inter Pipeline’s reliable dividend growth continues to be supported by attractive oil sands assets, a diversified business model, and robust cash flows. In 2019, the company posted net income of $539 million while funds from operations (FFO) — a key cash flow metric — clocked in at an impressive $873 million.

More importantly, management doled out $706 million in cash dividends at a payout ratio of 81%.

“Inter Pipeline’s pipeline transportation businesses continued to generate solid financial results in 2019,” said President and CEO Christian Bayle. “There was also a marked improvement in performance from our European storage business due to a number of new contract wins.”

Inter Pipeline shares currently offer a juicy dividend yield of 7.9% and trade at a forward P/E in the low-20s.

High energy

Rounding out our list is midstream energy giant TC Energy (TSX:TRP)(NYSE:TRP), which has delivered dividend growth of 53% over the past five years.

TC Energy’s consistent dividend continues to be underpinned by long-term contracts, massive scale ($100 billion in total assets), and attractive long-term growth potential (advancing over $20 billion worth of development projects).

In 2019, for example, the company’s earnings improved to $3.9 billion versus $3.5 billion in the year-ago period.

More important, management raised its annual dividend 8% to $3.24 per share.

“We are very pleased with the performance of our diversified portfolio of regulated and long-term contracted assets which generated record financial results again in 2019,” said CEO Russ Girling.

“Despite significant asset sales that accelerated the strengthening of our balance sheet, comparable earnings per share increased seven per cent compared to 2018 while comparable funds generated from operations of $7.1 billion were nine per cent higher.

TC Energy shares currently offer a dividend yield of 4.3%.

The bottom line

There you have it, Fools: three top dividend growth stocks for 2020.

As always, they aren’t formal recommendations. They’re simply a starting point for more research. The breaking of a dividend growth streak can be especially painful, so plenty of due diligence is still required.

Fool on.

Should you invest $1,000 in TD Bank right now?

Before you buy stock in TD Bank, 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 TD Bank 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 $21,345.77!*

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 24 percentage points since 2013*.

See the Top Stocks * Returns as of 4/21/25

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 Brian Pacampara owns no position in any of the companies mentioned.   

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

Man data analyze
Dividend Stocks

Where Will Canadian Tire Stock Be in 3 Years?

Down almost 30% from all-time highs, Canadian Tire stock is unlikely to deliver market-beating returns to shareholders in the next…

Read more »

four people hold happy emoji masks
Dividend Stocks

1 Great TSX Dividend Stock Down 10% to Buy and Own for Decades

Bank of Nova Scotia is down 10% in 2025. Is the stock now oversold?

Read more »

Canadian dollars are printed
Dividend Stocks

Beat the TSX With These Cash-Gushing Dividend Stocks

Learn how recent macro events have affected stocks on the TSX, and find out which stocks are thriving despite challenges.

Read more »

dividends grow over time
Dividend Stocks

How I’d Build a $15,000 Portfolio Around These 3 Blue-Chip Dividend Stocks

Dividend stocks are one thing, but blue-chip dividend stocks are some of the top options out there.

Read more »

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

TFSA Investors: 2 TSX Stocks to Buy for Dividend Income

These stocks have increased their dividends every year for decades.

Read more »

exchange traded funds
Dividend Stocks

2 Rock-Solid Canadian ETFs to Safeguard Your Portfolio During Trump’s 90-Day Tariff Pause

BMO Low Volatility Canadian Equity ETF (TSX:ZLB) and another ETF were built for tougher market sledding.

Read more »

people relax on mountain ledge
Dividend Stocks

3 TSX Dividend Stocks to Buy for TFSA Passive Income

These stocks trade at reasonable prices and offer high dividend yields.

Read more »

Paper Canadian currency of various denominations
Dividend Stocks

The Smartest Canadian Stock to Buy With $250 Right Now

Analysts are super excited about this Canadian stock, so let's get into why.

Read more »