2 Dividend Aristocrat Stocks That Could Pay You Forever

Receiving dividends forever is not a dream. The Toronto Dominion Bank stock and BCE stock are two dividend aristocrats capable of paying lasting cash flows to income investors.

| More on:

Lots of people venture into the stock market to buy dividend stocks to create passive income. If the payouts are recurring, you can even amass significant wealth over time.  However, if you want the income stream to be lasting, if not forever, not all dividend payers can fulfill your wish.

The Toronto Stock Exchange (TSX) is home to several publicly-listed companies that attract investors for their dividend offers. Last year was not pretty because some established dividend stocks had to stop or slash dividends due to COVID-19. Businesses soured that it was necessary to preserve cash and protect the balance sheet.

In a catastrophic event like the global pandemic, some companies will prove their resiliency and stand out to income investors. The Toronto-Dominion Bank (TSX:TD)(NYSE:TD) endured the impact, as did telco giant BCE (TSX:BCE)(NYSE:BCE). Both companies are Dividend Aristocrats that could pay you forever.

No-brainer long-term hold

Toronto-Dominion Bank is a no-brainer buy not only for its outstanding dividend track record, but also for its ability to rise above adversity. In the 2008 financial crisis, this $136.93 billion bank was the only company that reported revenue and profit growth. For would-be investors, TD pays a 4.16% dividend. The bank has been paying dividends since 1857 or 163 years.

In fiscal 2020 (year ended October 31, 2020), Canada’s second-largest bank reported $11.89 billion in net income, a 1.79% increase versus fiscal 2019. TD’s financial results were stellar, considering the $7.2 billion provision for credit losses that increased by 139% compared to the previous year.

The financial side is just one of the key strengths of TD, especially during the pandemic. Its strong digital foundation won the bank several honours. According to mobile data and analytics platform App Annie, TD is the top banking app (January to June 2020) among the leading banks in the Canadian market.

Comscore also reports that TD obtained the highest digital penetration (July to September 2020) in Canada. Chief Digital and Payments Officer Rizwan Khalfan said TD would support its clients as the needs evolve and continue to innovate in ways that will create seamless customer experiences across all channels.

Enduring dividends

BCE maintained its strong financial position despite the challenging environment. The 3.8% and 17.0% drop in operating revenues and net earnings in 2020 versus 2019 is certainly not cause for alarm. Management did not suspend or reduce dividends. Currently, BCE pays a high 6.31% dividend.

The $50.18 billion owner of Bell Wireless, Bell Wireline, and Bell Media forecast revenue growth of between 2% to 5% in 2021. It also estimates the same percentage growth in adjusted EBITDA. Free cash flow is projected to $2.8 billion to $3.2 billion.

BCE’s plan this year is to help drive Canada’s social and economic recovery. The company will accelerate spending by at least $1 billion over the next two years and deliver fibre connections, rural Internet services and the fastest 5G network. Aside from the dividend hikes over the last 11 years, the telco stock is a recession-resistant asset. The payouts should therefore endure for decades.

Great anchors

Living off dividends is not a fairy tale if you own Dividend Aristocrats capable of paying you forever. Toronto-Dominion Bank and BCE are leaders in their respective industries. Both are great anchors in your investment portfolio.

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 Christopher Liew has no position in any of the stocks mentioned.

More on Dividend Stocks

Train cars pass over trestle bridge in the mountains
Dividend Stocks

Is CNR Stock a Buy, Sell, or Hold for 2025?

Can CNR stock continue its long-term outperformance into 2025 and beyond? Let's explore whether now is a good time to…

Read more »

coins jump into piggy bank
Dividend Stocks

The Smartest Dividend Stocks to Buy With $500 Right Now

These top dividend stocks both offer attractive yields and trade off their highs, making them two of the best to…

Read more »

Middle aged man drinks coffee
Dividend Stocks

Here’s the Average TFSA Balance at Age 35 in Canada

At age 35, it might not seem like you need to be thinking about your future cash flow. But ideally,…

Read more »

ETF stands for Exchange Traded Fund
Dividend Stocks

How to Invest Your $7,000 TFSA Contribution in 2024

Here's how I would prioritize a $7,000 TFSA contribution for growth and income.

Read more »

a man relaxes with his feet on a pile of books
Dividend Stocks

CPP Pensioners: Watch for These Important Updates

The CPP is an excellent tool for retirees, but be sure to stay on top of important updates like these.

Read more »

Technology
Dividend Stocks

TFSA Investors: 3 Dividend Stocks I’d Buy and Hold Forever

These TSX dividend stocks are likely to help TFSA investors earn steady and growing passive income for decades.

Read more »

four people hold happy emoji masks
Dividend Stocks

Love Dividend Growth? Check Out These 2 Income-Boosting Stocks

National Bank of Canada (TSX:NA) and another Canadian dividend-growth stock are looking like a bargain going into December 2024.

Read more »

An investor uses a tablet
Dividend Stocks

A Dividend Giant I’d Buy Over Enbridge Stock Right Now

Enbridge stock may seem like the best of the best in terms of dividends, but honestly this one is far…

Read more »