It’s no secret that Dividend Aristocrats are some of the best long-term investments due to their lengthy track records of consistently growing profitability.
To even become a dividend stock in the first place, a company needs to be well established, consistently earning a profit and large enough that it can afford to take cash out of the business and return it to investors. That’s why dividend stocks are a favourite amongst many investors, especially in this uncertain market environment.
However, when it comes to Dividend Aristocrats, these stocks are easily some of the best. Not only can they afford to return cash to investors each year, but they’re also consistently increasing the dividend payments they make to investors.
That means that even with all the cash they’re taking out of the business to pay investors, their operations are still high quality enough, and their cash flow generation is robust enough that they can increase their dividend payments every year while still investing in future growth, continuing those dividend increases for years to come.
So, if you’re looking to buy Canadian dividend stocks as core pillars of your portfolio, here are three of the best that could help turbocharge your investments.
Two Dividend Aristocrats with some of the longest dividend-growth streaks in Canada
When it comes to buying Dividend Aristocrats for your portfolio, there’s no question that two of the very best stocks in Canada are Fortis (TSX:FTS) and Enbridge (TSX:ENB) for many of the same reasons.
Although Fortis has slightly less risk as a regulated utility company, both stocks are reliable long-term investments due to the essential nature of their services and the long-life assets that they own.
Fortis offers utility services that hardly ever see a significant change in demand no matter what the state of the economy. Furthermore, because its industry is regulated, its future revenue and earnings are highly predictable.
Meanwhile, Enbridge is responsible for transporting roughly 30% of all the crude oil produced in North America and 20% of the gas consumed in the U.S., so its operations are also essential, making it a highly reliable long-term investment.
In addition, both stocks own long-life assets that need only minimal maintenance expenses each year, allowing them to constantly generate billions in cash flow. This gives these Dividend Aristocrats enough cash to invest in future growth projects while also paying hefty dividends to investors right now.
Today, Fortis offers a yield of roughly 4% and has a dividend-growth streak of 50 straight years, making it the second-longest-running Dividend Aristocrat in Canada. Meanwhile, Enbridge offers a yield of 6.8% today, and with a dividend-growth streak of 27 consecutive years, it has the 10th longest dividend-growth streak in Canada.
A lower yield dividend-growth stock to buy and hold for years
In addition to the compelling yields that Fortis and Enbridge offer, you could also consider adding a lower-yield Dividend Aristocrat that provides more capital gains potential.
For example, Alimentation Couche-Tard (TSX:ATD) has a 13-year dividend-growth streak. However, the stock only offers a yield of roughly 0.85% today.
The reason Couche-Tard pays less of a dividend is that it’s still growing rapidly and using its free cash flow to acquire more businesses and expand its operations.
Typically, companies will continue to invest most of their cash into improving their operations if they feel the growth potential is high enough. And clearly, with Couche-Tard’s share price up over 480% in the last decade, that’s the best use of cash for the company.
So, if you’re looking for a reliable Dividend Aristocrat that can also help to grow your money rapidly and consistently, Couche-Tard is an excellent choice to buy now.
Plus, should its growth potential start to slow down in the coming years, management would likely start to increase the proportion of cash flow that it’s using to fund the dividend, rapidly increasing the yield Couche-Tard provides.
Therefore, if you’re looking to supercharge your portfolio today, there’s no question that Couche-Tard is one of the top Dividend Aristocrats to buy now.
