Dividend stocks are a must for a balanced portfolio due to their regular payouts and stability. Meanwhile, the increase in interest rates by federal banks worldwide has impacted several companies’ financials and dividend payouts. So, investors should be careful while buying dividend stocks. They should look to add stocks with solid underlying businesses, healthy cash flows, and impressive dividend-paying records.
Considering all these factors, investors can go long on the following three Canadian Dividend Aristocrats (stocks that have increased their dividends for five consecutive years) to boost their passive income.
Telus
Telus (TSX:T) is an excellent dividend stock to have in your portfolio. It enjoys stable and predictable cash flows, with telecommunication companies earning substantial revenue from recurring sources. These stable cash flows have allowed the company to enhance shareholders’ returns through share repurchases and dividend growth. Since 2004, the company has returned $18 billion in dividends and $5 billion through share repurchases. It has raised its dividend consistently for the previous 19 years, with its forward yield at 5.77%.
Meanwhile, the demand for Telus’s services is growing amid digitization and the increased adoption of remote working and online shopping. The company is also strengthening its 5G and high-speed broadband infrastructure amid the growing demand. The growth in its tech-oriented verticals, Telus International, Health, and Agriculture & Consumer Goods, could continue to boost its financials in the coming quarters. Also, Telus trades at an attractive NTM (next 12-month) price-to-sales multiple of 1.7, making it an attractive buy.
TC Energy
TC Energy (TSX:ENB) is a midstream energy company that generates around 95% of its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) from regulated assets and long-term contracts. So, commodity price fluctuations will not significantly impact the company’s financials, thus generating predictable cash flows. Supported by these stable cash flows, the company has been raising its dividend at a CAGR (compound annual growth rate) of 7% since 2000. Meanwhile, its forward yield stands at a juicy 6.97%.
Notably, TC Energy is continuing with a $34 billion secured capital program by putting $1.4 billion worth of projects into service in the first quarter of 2023. It is also working on strengthening its balance sheet through its $5 billion asset-divestiture program. Considering all these factors, I believe the company’s future payouts are safe, thus making it an excellent buy for income-seeking investors.
Fortis
Fortis (TSX:FTS) is a Canadian utility company, with 93% of its assets involved in low-risk transmission and distribution business. The company serves around 3.4 million customers meeting their electric and natural gas needs through its 10 regulated utility businesses. Given the essential nature of its business and regulated assets, the company’s financials are not impacted by economic downturns, thus allowing it to raise its dividend consistently. Fortis has increased its dividend uninterrupted for the previous 49 years, with its forward yield currently at 4%.
Meanwhile, the company focuses on growing its rate base and has committed to investing around $22.3 billion from 2023 to 2027. These investments could expand its rate base at a CAGR of 6.2%, thus boosting its cash flows in the coming years. So, I believe Fortis is well positioned to continue with its dividend growth, thus making it an ideal buy to boost your passive income.
