Passive-Income Investors: 3 Stocks With Fast-Growing Dividends

Are you on the hunt for new stocks to add to your portfolio? These three stocks could be great holds in terms of passive income!

| More on:

It’s no secret that inflation is running rampant this year. In March 2022, the national inflation rate was reported to be 6.7%. That’s much higher than the long-term average of 2% and even higher than the reported inflation rate in February. With that in mind, investors need to be conscious about how this is affecting their sources of passive income.

As inflation increases, investors lose buying power. This means that investors focused on establishing a large amount of passive income need to find stocks that can increase their dividend distribution faster than the rate of inflation. In this article, I’ll discuss three stocks with very fast dividend-growth rates.

A leader in an important industry

The railway industry has played a large role in helping create the country’s economy as we know it today. As it stands, there still isn’t a viable way to transport large amounts of goods over long distances if not via rail. Because of that, I believe that the railway companies operating in Canada could continue to see a lot of demand over the coming years. That’s why Canadian National Railway (TSX:CNR)(NYSE:CNI) stands out as a good company to hold in a portfolio.

However, what makes this company even more impressive is its outstanding dividend. Canadian National has increased its dividend in each of the past 25 years. That makes it one of only 11 Canadian companies to reach that milestone. In addition, its dividend has grown at a CAGR of 12.2% over the past five years. That keeps its dividend-growth rate above even this year’s inflation rate.

This stock is greatly underappreciated

Another stock that deserves consideration for any passive-income portfolio is Alimentation Couche-Tard (TSX:ATD). This company may be one of the most underappreciated stocks on the TSX, in my opinion. It doesn’t operate a very exciting business, but it has steadily grown into a large global entity. Today, Alimentation Couche-Tard operates about 15,000 stores across 15 countries.

Listed as a Canadian Dividend Aristocrat, Alimentation Couche-Tard has increased its dividend in each of the past 11 years. Over the past five years, its dividend has grown at a CAGR of 19.6%. Alimentation Couche-Tard doesn’t offer investors a very attractive forward yield. However, its payout ratio is still very low (11.4%). That means it could continue to increase its dividend at a very fast rate over the coming years.

One of the most impressive dividend-growth rates around

Whenever I think of companies with a very fast dividend-growth rate, I always think of goeasy (TSX:GSY). For those that are unfamiliar, this company operates two distinct business segments. First is easyfinancial, which provides high-interest loans to subprime borrowers. Second, it operates easyhome, which sells furniture and other home goods on a rent-to-own basis.

Like the other companies discussed here, goeasy is listed as a Canadian Dividend Aristocrat. It has increased its dividend in each of the past eight years. Over the past five years, this stock has grown its dividend at a staggering rate of 32.2%. That greatly outpaces the inflation rate. Despite those increases, goeasy manages to maintain a very low dividend-payout ratio (18%). Investors could see this dividend continue to grow at a fast rate in the future.

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 Jed Lloren has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alimentation Couche-Tard Inc. The Motley Fool recommends Canadian National Railway.

More on Dividend Stocks

chart reflected in eyeglass lenses
Dividend Stocks

Is Alimentation Couche-Tard Stock a Buy for its 0.9% Dividend Yield?

Couche-Tard stock's small yield is not enticing, but its growth potential could be a wealth creator.

Read more »

Hourglass and stock price chart
Dividend Stocks

5.2% Dividend Yield! I’m Buying This TSX Stock and Holding for Decades!

With its 5.2% dividend yield, Toronto-Dominion Bank (TSX:TD) is a stock I'm eagerly buying.

Read more »

Man looks stunned about something
Dividend Stocks

Better Long-Term Buy: Dollarama Stock or Canadian Tire?

Both of these Canadian stocks have proven to be solid long-term buys, but which is better for the average investor?

Read more »

Canadian dollars are printed
Dividend Stocks

Beat the TSX With This Cash-Gushing Dividend Stock

Toronto-Dominion Bank (TSX:TD) stock could do well in the year ahead.

Read more »

monthly desk calendar
Dividend Stocks

Monthly Income: Top Dividend Stocks to Buy in November

Here are two of the best monthly dividend stocks in Canada you can buy in November 2024 and hold for…

Read more »

profit rises over time
Dividend Stocks

These 2 Dow Stocks Are Set to Soar in 2025 and Beyond

Two Dow Jones stocks are screaming buys but Canadians must hold them in an RRSP or RRIF to avoid paying…

Read more »

TFSA (Tax free savings account) acronym on wooden cubes on the background of stacks of coins
Dividend Stocks

How to Use Your TFSA to Earn Ultimate Passive Income

If you have a TFSA, then you have the key to creating ultimate passive income. All you need is a…

Read more »

Confused person shrugging
Dividend Stocks

Better Buy: Fortis Stock or Hydro One Stock?

Let's do a compare and contrast of these two top utilities stocks right now, shall we?

Read more »