Investors planning to build a bulletproof passive-income portfolio should look for dividend stocks with the potential to sustain and increase their payouts in all market conditions. While the TSX has several stocks that distribute dividends, I’ll focus on fundamentally strong companies with stellar dividend payments and growth history.
In light of this, let’s delve into Canadian stocks that are ideal for crafting a robust passive-income portfolio. Notably, it’s possible to establish this income portfolio with $20,000.
Canadian Natural Resources
Shares of Canadian Natural Resources (TSX:CNQ) come across as a solid passive-income stock. Its solid dividend payments and ability to increase its dividend insanely fast support my optimistic outlook. This crude oil and natural gas producer has increased its dividend for 24 consecutive years. At the same time, its dividend has grown at a compound annualized growth rate (or CAGR) of 21%.
The company’s diversified asset generates solid fund flows from operations, enabling it to enhance its shareholders’ returns via dividend growth in all economic environments. Further, its cost control, strong balance sheet, and ability to internally generate cash flows to support growth opportunities are well-suited for growth. This energy company pays a quarterly dividend of $1 per share, translating into a reliable yield of 4.5% (based on the closing price of $88.74 on November 28).
Enbridge
Besides Canadian Natural Resources, Enbridge (TSX:ENB) is another attractive stock for passive-income seekers in the energy space. Specializing in oil and gas transportation, Enbridge has consistently raised its dividend payouts irrespective of economic conditions. Notably, the company has achieved an impressive record of 28 consecutive years of dividend increases, reflecting a CAGR of 10% over the same period.
Enbridge ensures the stability of its dividends through its highly diversified stream of cash flows. Furthermore, the company’s sustainable payout ratio, ranging from 60% to 70% of Distributable Cash Flow (DCF), positions it favourably for the long term. Enbridge is well positioned to leverage the growing energy demand, thanks to its investments in both conventional and renewable energy. Contractual arrangements, power-purchase commitments, multi-billion-dollar secured projects, and strategic acquisitions bolster the company’s growth prospects. Enbridge disburses a quarterly dividend of $0.887 per share and offers an appealing yield of 7.7%.
Fortis
With a remarkable track record of growing its dividend for 50 consecutive years, Fortis (TSX:FTS) stock is a must-have in a passive-income portfolio. The regulated electric utility company generates predictable cash flows that continue to grow and enable it to offer higher dividend payments.
The company’s earnings depend on its rate base growth. Notably, Fortis projects its rate base to grow at a CAGR of 6.3% through 2028. This means that Fortis will be well positioned to grow its future payouts at a decent pace. The company’s management remains upbeat and expects to increase its annual dividend by 4-6% in the medium term.
Fortis’s low-risk business, growing cash flows, and visibility of future payouts make it an excellent stock to start a growing passive-income stream. The company pays a quarterly dividend of $0.59 a share, reflecting a well-protected yield of 4.3%.
Bottom line
These three dividend-paying companies are attractive investments for building a bulletproof passive income portfolio. On average, these companies offer a dividend yield of 5.5%, implying one can earn a passive income of $1,100/year by investing $20,000 equally in these three stocks.
