3 Safe Dividend Stocks for Steady Income

These companies have strong earnings growth potential and have consistently raised dividends for more than 10 years.

protect, safe, trust

Image source: Getty Images

If you plan to build a reliable income portfolio, add high-quality dividend-paying stocks. While creating an income-generating portfolio, it’s essential to look at a company’s earnings potential. Further, it’s prudent to look at its dividend payment and growth history. 

With a reliable income stream in the backdrop, let’s look at a few Canadian corporations with strong visibility over future earnings. Moreover, these companies have been paying and increasing dividends for more than a decade. 

Algonquin Power & Utilities

Let’s begin with Algonquin Power & Utilities (TSX:AQN)(NYSE:AQN), which has increased its dividend for 11 years. It’s worth noting that Algonquin Power operates a low-risk business, while its regulated assets generate predictable cash flows. Thanks to its ability to consistently grow its earnings, Algonquin Power returns a substantial amount of cash in the form of higher dividend payments. 

This utility company’s robust investment pipeline is expected to drive its high-quality earnings base, indicating that Algonquin Power could continue to grow its dividend at a healthy pace. It projects the rate base to grow at a CAGR of 14.6% through 2026, resulting in an annualized growth of 7-9% in its adjusted earnings during the same period. 

Overall, its high-quality assets, long-term contracts, growing rate base, strong dividend payment history, and visibility over future earnings make Algonquin Power & Utilities a reliable income-generating stock. Further, the expansion of its renewables capacity and opportunistic acquisitions bode well for future growth. It offers a dividend yield of 4.5%, while its payouts are sustainable in the long term.  

Enbridge 

Next up is Enbridge (TSX:ENB)(NYSE:ENB), which has increased its dividend uninterrupted for 27 years. Its diversified cash flow streams, contractual arrangements, and inflation-protected revenues have led Enbridge to grow its dividend at a CAGR of 13% since 2008. 

With the strong energy demand, recovery in its mainline volumes, ongoing strength in its base business, and multi-billion secured capital program, Enbridge is positioned well to grow its distributable cash flows and pay a higher dividend. 

Notably, Enbridge expects its distributable cash flow per share to increase by 5-7% per annum in the medium term. This implies that its dividend could grow in the mid-single-digit range. ENB offers a dividend yield of more than 6%, which is highly reliable considering its solid cash-generating capabilities and long dividend payment history. 

Fortis

The final stock on my list is Fortis (TSX:FTS)(NYSE:FTS). Fortis increased its dividend for 48 consecutive years and is among the top stocks to generate steady income amid all market conditions. Its conservative business and high-quality regulated assets generate solid cash flows and support higher dividend payments. 

Fortis operates multiple regulated utility businesses that account for 99% of its earnings, indicating that its payouts are well protected. Meanwhile, it expects its rate base to grow at a CAGR of 6% in the medium term, which would expand its earnings base. Thanks to the rate base growth, Fortis sees a 6% annual growth in its dividend through 2025. 

Fortis’s strong dividend payment history, predictable cash flows, and visibility over future dividend growth make it an attractive income stock. 

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 Sneha Nahata has no position in any of the stocks mentioned. The Motley Fool recommends Enbridge and FORTIS INC.

More on Dividend Stocks

hand stacks coins
Dividend Stocks

3 Ultra-High-Yield Dividend Stocks You Can Buy and Hold for a Decade

These three high-yield dividend stocks still have some work to do, but each are in steady areas that are only…

Read more »

senior man and woman stretch their legs on yoga mats outside
Dividend Stocks

TFSA: 2 Canadian Stocks to Buy and Hold Forever

Here are 2 TFSA-worthy Canadian stocks. Which one is a good buy for your TFSA today?

Read more »

calculate and analyze stock
Dividend Stocks

This 5.5% Dividend Stock Pays Cash Every Single Month!

This REIT may offer monthly dividends, but don't forget about the potential returns in the growth industry its involved with.

Read more »

Silver coins fall into a piggy bank.
Dividend Stocks

How to Use Your TFSA to Earn up to $6,000 Per Year in Tax-Free Passive Income

A high return doesn't mean you have to make a high investment -- or a risky one -- especially with…

Read more »

path road success business
Dividend Stocks

2 High-Yield Dividend Stocks to Buy Hand Over Fist and 1 to Avoid

High yields are great and all, but only if returns come with them. And while two of these might, another…

Read more »

Man holds Canadian dollars in differing amounts
Dividend Stocks

This 7% Dividend Stock Pays Cash Every Month

A high dividend yield isn't everything. But when it pays out each month and offers this stability, it's worth considering!

Read more »

young people stare at smartphones
Dividend Stocks

GST/HST “Vacation”: Everything Canadians Need to Know

The GST/HST "vacation" is a little treat for the holidays, along with a $250 payment. What should you do with…

Read more »

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 »