It’s very difficult to achieve financial independence solely through the income that you generate at work. That’s why you need to find ways to have your money work for you. By doing so, you can unlock new avenues to generate wealth and help yourself reach the financial goals you desire. In Canada, one of the most popular ways to get your dollars to work for you is by investing in dividend stocks. These stocks will pay shareholders on a recurring basis simply for holding shares in the company. Here’s how you can earn while you sleep!
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Start with this outstanding dividend company
It’s impossible to write an article about Canada’s dividend stocks without mentioning Fortis (TSX:FTS). This is a utility company that provides gas and electricity to more than three million customers. Currently, Fortis provides services in Canada, the Caribbean, and the United States. Because utilities are generally paid on a monthly basis, companies like Fortis can generate revenue on a recurrent basis. That provides the company with a very stable and predictable source of revenue.
Using the predictability of its revenue, Fortis is able to plan for dividend distributions much ahead of time. That gives the company the opportunity to raise its dividend each year. As of this writing, Fortis has already managed to increase its dividend in each of the past 50 years. The company has announced plans to continue doing so at a rate of 4-6% through to 2028. If you only have the desire to buy one Canadian dividend stock, I’d say you should consider making that Fortis.
This company has been a backbone of Canada’s economy
The Canadian railway industry may have singlehandedly been responsible for creating the country as we know it today. As of now, there are no viable ways of transporting large amounts of goods over long distances, if not via rail. In other words, we don’t know if Canada could have been established from coast to coast as quickly as it was if we didn’t have the railway. It’s because of that, that companies like Canadian National Railway (TSX:CNR) should hold a place in your portfolio.
In terms of its dividend, Canadian National Railway has managed to increase its dividend in each of the past 27 years. Although it’s not nearly as long as Fortis’s dividend-growth streak, it still places Canadian National among the elite Canadian Dividend Aristocrats. With a dividend-payout ratio of about 42%, Canadian National still has a lot of room to continue growing its dividend in the future.
A top stock for your portfolio
Finally, Canadian investors should consider buying shares of the Big Five Canadian banks. That is a group of companies that hold a massive lead on their competitors in one of the most stable industries in Canada. In my opinion, you could choose any of those five companies and do okay in the long run. However, if I had to pick only one, it would be Bank of Nova Scotia (TSX:BNS).
In terms of its dividend, this company is a behemoth. It doesn’t boast the same kind of dividend-growth streak as Canadian National Railway or Fortis. However, Bank of Nova Scotia has been paying shareholders a dividend since 1833. That represents 190 years of continued dividend distributions. Because of that long history of successfully distributing dividends to its shareholders, I believe Canadian investors could sleep well holding a large position in Bank of Nova Scotia, knowing their dollars are working for them.
