Investors seeking dependable passive income could consider adding shares of Dividend Aristocrats to their portfolio. These are the shares of Canadian companies that have paid dividends for five consecutive years or longer, making them reliable investments to earn steady cash.
Against this backdrop, I’ll discuss dividend-paying stocks that are fundamentally strong, have stellar dividend payment and growth history, and are well positioned to enhance their shareholders’ returns through higher payouts in the coming years.
This Dividend Aristocrat with 23 straight years of payout growth
Energy infrastructure company TC Energy (TSX:TRP) is one of the top stocks to own to start a growing passive-income stream. TC Energy has increased its annual dividend at a CAGR (compound annual growth rate) of 7% for more than two decades (23 years, to be precise). Furthermore, it offers a compelling yield of 7.36% (based on its closing price of $50.54 on July 18).
TC Energy’s solid dividend payouts are supported by its high-quality contracted and regulated assets. For instance, it generates approximately 95% of its earnings from regulated and contracted assets, which implies that its payouts are well covered.
Looking ahead, TC Energy’s focus on expanding its regulated and contracted assets base through its $34 billion secured capital program augurs well for dividend growth. Further, its ability to generate sustainable cash flows bodes well for future dividend growth. The company plans to increase its dividend by 3-5% per annum in the coming years, which is positive. Overall, its resilient business, solid payout history, and visibility over future dividend growth make it a must-have stock for income investors.
Enbridge: A top Dividend Aristocrat
Enbridge (TSX:ENB) is among the most dependable Dividend Aristocrats due to the resiliency of its business and attractive payout history. It transports oil and gas. Moreover, it also owns a growing portfolio of renewable energy facilities. The company’s high-quality asset base, investments in conventional and renewable businesses, and long-term contracts add resiliency to its business and enable it to generate solid cash flows to support higher payouts.
Thanks to its growing cash flows, this large-cap energy company has paid a regular dividend for 68 years. Moreover, it increased its dividend at a CAGR of 10% for 28 consecutive years.
Enbridge is well positioned to capitalize on the long-term energy demand. Meanwhile, its low capital intensity utility-like projects, regulated cost-of-service tolling frameworks, low-risk commercial arrangements, and power-purchase agreements bode well for growth. Currently, Enbridge offers an attractive dividend yield of over 7.36%.
Fortis: 49 consecutive years of dividend growth
Regulated gas and electric utility company Fortis (TSX:FTS) is a must-have Dividend Aristocrat to earn worry-free income in all market conditions. Its low-risk business generates growing and predictable cash flows, which enables it to enhance shareholders’ returns through higher dividend payments. Thanks to its resilient business model and cash flows, Fortis increased its dividend for 49 consecutive years. Furthermore, it expects to grow its dividend by 4-6% annually through 2027.
The company generates most of its earnings from regulated utility businesses, implying that its payouts are well covered. Furthermore, it continues to grow its rate base through multi-billion secured capital projects, which will drive its earnings and dividend payouts.
Investors can earn a reliable dividend yield of 4% by investing in this Dividend Aristocrat near the current levels.
