When inflation began to surge a few years ago and quickly started sending the cost of living soaring, it certainly caught many by surprise. So, although inflation has been subsiding in recent months, and interest rates are now on the decline in Canada, it’s still paramount that investors own safe, high-quality dividend stocks that can help beat inflation.
Even with inflation coming back under control, the inflation rate is hardly ever at 0%. In fact, the target rate that the Bank of Canada aims to keep inflation at to ensure that the Canadian economy stays healthy is 2% inflation annually.
Therefore, owning reliable dividend growth stocks that consistently pay you more money each year is one of the best ways to position your portfolio to beat inflation. Furthermore, your portfolio will be much stronger should inflation ever start surging again in the future.
So, with that in mind, here are three safe Canadian dividend stocks to help you beat inflation.
A safe Canadian stock with 50 straight years of dividend increases
Finding safe and reliable dividend-growth stocks to buy and hold long-term is all about investing in high-quality companies that provide essential services.
That’s why utility stocks are some of the best dividend-growth stocks you can buy, and one of the very best utility stocks in Canada is Fortis (TSX:FTS).
Since Fortis provides electricity and gas services, which typically have steady demand, and because its industry is regulated by the government, Fortis’s future revenue and earnings potential are highly predictable.
This allows Fortis to continue increasing the cash it’s paying back to investors while ensuring that dividend remains stable. Furthermore, although utilities are already one of the lowest-risk industries you can invest in, Fortis mitigates even more risk by owning utilities in 10 different jurisdictions.
And going forward, with the ongoing shift to cleaner energy, demand for electricity should only continue to rise, giving Fortis years of growth potential ahead of it, making it one of the best safe dividend stocks on the TSX to consider buying today.
Two top Canadian stocks providing essential services
Just like Fortis, two more safe and reliable dividend-growth stocks to buy to help beat inflation are Enbridge (TSX:ENB) and Telus (TSX:T).
Enbridge is a massive energy infrastructure company with heavily diversified operations that are all crucial to the North American economy. Telus, however, is a $33 billion telecommunications stock that not only provides essential services but also earns tonnes of recurring revenue, making it an ideal dividend-growth stock.
Another similarity both these stocks have to Fortis that helps make them such safe dividend stocks are the long-life assets they own.
Assets such as telecom towers or pipelines can earn these companies significant cash for years and require minimal maintenance year over year, ensuring that these stocks constantly generate billions in cash flow, which they use to expand operations, invest in growth, and fund their growing dividends.
So, it’s no surprise that both of these high-quality companies also have lengthy dividend-growth streaks. While Fortis’s 50-year streak is unbelievable and the second longest streak in Canada, Enbridge’s 27 straight years and Telus’s 19 straight years of dividend increases are also impressive and demonstrate how reliable their businesses are, especially throughout different economic environments.
Finally, just like Fortis, both of these stocks continue to have plenty of growth potential going forward.
Not only does Enbridge continue to see more demand for many of its services every year, but it also has a rapidly growing green energy portfolio it continues to invest in. Meanwhile, as technology continues to improve telecommunications services only continue to become more important in Canada.
It’s also worth noting that all three of these companies will benefit from lower interest rates in the coming months. So, while interest rates are still elevated and these safe dividend stocks trade undervalued, now is an excellent time to consider adding them to your portfolio.
