Top-quality dividend stocks are attractive investments to earn worry-free passive income. Thankfully, the TSX has several fundamentally strong companies that are well known for consistently paying and increasing their dividends regardless of market conditions.
So, if you plan to invest in shares to generate regular income, here are the five top Canadian dividend stocks to buy now.
Canadian Utilities
The first stock to consider is Canadian Utilities (TSX:CU). This energy infrastructure and utility company has a stellar track record of dividend growth. For instance, it has increased its dividend every year for the past 51 years, the longest by any Canadian publicly traded company. This makes it a top stock for investors seeking worry-free income.
Its diversified revenue base comprising highly contracted and regulated assets enables Canadian Utilities to generate solid earnings, supporting higher dividend payments. Canadian Utilities continues investing in regulated utility and commercially secured energy infrastructure capital growth projects, which will likely drive its future earnings and dividend payouts. The stock offers a yield of 5.83% based on the closing price of $30.74 on February 22.
Fortis
Alongside Canadian Utilities, investors can also consider investing in the utility giant Fortis (TSX:FTS). It owns regulated electric utility businesses that generate predictable cash flows in all market conditions, enabling Fortis to increase its dividends consistently. Fortis has increased its dividend for 50 consecutive years and is on track to grow it further at a decent pace.
Fortis expects to grow its rate base at a compound annual growth rate (CAGR) of 6.3% through 2028. Further, it projects its annual dividend to increase by 4-6% during the same period. Its low-risk business, growing cash flows, and focus on expanding its renewables portfolio will likely cushion its payouts. Fortis offers a yield of 4.39%.
Enbridge
With an impressive yield of 7.78% and a history of growing its dividend for 29 consecutive years, Enbridge (TSX:ENB) is undoubtedly one of the top stocks for regular income. This Dividend Aristocrat transports oil and gas. Its highly utilized asset portfolio, power-purchase agreements, and cost-of-service tolling arrangements enable the company to generate strong distributable cash flow (DCF) that covers its payouts.
Further, its secured capital projects, ongoing investments in conventional and renewable assets, and strategic acquisitions position it well to capitalize on energy demand and deliver solid DCF. Further, its target payout ratio of 60-70% of DCF is sustainable in the long term.
Canadian Natural Resources
Canadian Natural Resources (TSX:CNQ) is well-known for consistently increasing its dividend at a higher pace. For instance, this oil and natural gas company has raised its dividend for 24 years. Moreover, its dividend sports a CAGR of an impressive 21% during the same period, which makes it a lucrative income stock.
The company’s diversified assets, low-risk and high-value reserves, and low maintenance capital requirement position it well to grow its earnings at a solid pace. Canadian Natural Resources’s ability to generate solid earnings and focus on returning cash to its shareholders makes it a compelling investment. It offers a yield of 4.48% near the current market price.
Toronto-Dominion Bank
The final stock is of a leading Canadian bank, Toronto-Dominion Bank (TSX:TD). It has grown its dividend at a CAGR of 10% since 1998. However, what stands out is that Toronto-Dominion Bank has consistently paid a dividend for 167 years. This makes it one of the most reliable bets to earn a steady passive income.
The financial services giant’s diversified revenue base, growing asset base, strong credit quality, and focus on enhancing efficiency support its earnings and higher dividend payments. Further, its low payout ratio of 40-50% is sustainable. Toronto-Dominion Bank offers a yield of about 5%.
