Dividend stocks are a popular investment for investors seeking regular passive income. The TSX has several fundamentally strong companies that continue to pay and increase their dividends, making them relatively safe income stocks.
These Canadian dividend-paying stocks are backed by companies with solid business models, growing earnings bases, and solid cash flows. Further, they have well-covered payouts and a strong commitment towards enhancing shareholder’s value, regardless of market conditions.
Against this background, let’s look at three such Canadian stocks with the potential to offer worry-free dividend income over the next decade. Remember, while these stocks are promising, no investment is completely safe or risk-free.
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Stock #1
Speaking of safe dividend stocks, Enbridge (TSX:ENB) could be a reliable bet. This energy company’s resilient business model and growing earnings base support its payouts in all market conditions. It’s worth highlighting that Enbridge has paid dividends for over 69 years. Moreover, it uninterruptedly raised its dividend for 29 years, boasting an impressive compound annual growth rate (CAGR) of 10%.
Enbridge transports oil and gas and is well-positioned to capitalize on long-term energy demand through its high-quality infrastructure assets and continued investments in conventional and renewable energy sources. Further, the company benefits from a high asset utilization rate, long-term contracts, power-purchase agreements, and multi-billion-dollar capital projects, which drive its distributable cash flow (DCF) per share.
What stands out is that Enbridge’s management remains committed to enhancing its shareholders’ return through higher dividend payouts. The company’s EPS and DCF per share are projected to increase at a mid-single-digit rate in the long term, leading to low-to-mid-single-digit growth in its dividend. Besides solid dividends, Enbridge offers an attractive yield of 7.4% (based on the closing price of $48.93 on June 12).
Stock #2
Utility companies are known for their durable dividend payments, which are supported by their defensive business model and predictable cash flows. Canadian Utilities (TSX:CU) stands out for its unmatched dividend payment history among the top utility companies. It boasts an uninterrupted dividend-growth history of 52 years, the longest by any Canadian company. Further, it offers an attractive yield of 5.8%, near the current price levels.
The company’s defensive business model, growing rate base, and predictable cash flows position it well to enhance its shareholders’ value through consistently higher dividend payments. Further, its payouts are well-protected by regulated utility assets.
Canadian Utilities continues to invest in regulated utility assets, which will likely expand its rate base and future earnings. Moreover, the company’s focus on investing in commercially secured energy infrastructure capital projects will likely support its profits and dividends.
Stock #3
Leading Canadian banks are reliable investments for passive income, as they have been paying dividends for over a century. Among the top banks on the TSX, Bank of Montreal (TSX:BMO) could be a valuable addition to your portfolio for worry-free passive income over the next decade.
This financial services company has the longest track record of dividend payments in Canada, with over 195 years. It has increased its dividend at a CAGR of 5% in the past 15 years. Over the medium term, Bank of Montreal expects its earnings to increase at a CAGR of 7 to 10%, enabling it to grow its dividend at least at a mid-single-digit rate during the same period.
The bank’s diversified revenue base, expansion of its loan portfolio, solid deposit base, and operational efficiency will enable it to grow its earnings and dividend payments. Bank of Montreal stock currently offers a juicy dividend yield of over 5.3%.
