Top dividend stocks can help earn steady passive income. Moreover, investors can enhance their overall returns in the long run by reinvesting dividends. While high-quality dividend stocks are less volatile and offer reliable payouts, they are not risk-free or safe.
Thus, investors should look for companies that stand out for their solid fundamentals, including a growing earnings base, strong cash flows, and well-covered payouts. These make them relatively safe choices for Canadian dividend investors. With that background, let’s explore three Canadian stocks that are well-positioned to deliver value to their shareholders over the next decade, no matter the economic climate.
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Dividend stock #1
Investors looking for safe dividend stocks could consider investing in Canadian Utilities (TSX:CU). The leading utility and energy infrastructure company is renowned for its track record of dividend payments. Canadian Utilities holds the record for the longest streak of annual dividend increases among Canadian publicly traded companies, raising its dividend every year for the past 52 years.
Its regulated, long-term, contracted earnings support the company’s steady dividend growth. Over the years, Canadian Utilities has expanded its global asset base to $15.4 billion by continuing to invest in its utilities, which has supported its ability to raise dividends.
Canadian Utilities aims to grow its dividends in line with its sustainable earnings growth, driven by its investments in regulated and long-term projects. Between 2024 and 2026, the company plans to invest $4.6-$5 billion in regulated utilities, boosting earnings, generating cash flow, and supporting future dividend increases.
The company’s rate base is projected to expand by 3.5-4.3% through 2026, strengthening its earnings. While the company’s regulated utilities provide a stable source of income, its investments in renewable energy, clean fuels, and energy storage offer the potential for even higher growth and diversification. With a dividend yield of around 5%, Canadian Utilities is in a solid position to continue rewarding its investors with steady dividend increases over the next decade.
Dividend stock #2
Fortis (TSX:FTS) is also worth considering within the utility sector. This regulated electric utility company has earned its place as a Dividend King, boasting an impressive 50-year streak of dividend increases. Further, Fortis plans to increase its dividend by 4-6% annually through 2028.
Its regulated rate base ensures stable earnings and predictable cash flows, regardless of market conditions. The predictable cash flows cover its dividend payments.
Fortis’s $25 billion capital projects will drive its rate base by an average of 6.3% annually through 2028, setting the stage for higher dividend payments.
Furthermore, Fortis continues to explore additional energy infrastructure investments to fuel even faster growth and offers a dividend yield of 3.8%. Fortis is a reliable choice for income investors with its solid dividend payment history, predictable cash flows, and growth potential.
Dividend stock #3
Like utility companies, leading Canadian banks are also renowned for their stellar dividend payment history. Notably, top Canadian banks have been paying dividends for decades, and Bank of Montreal (TSX:BMO) is one of them, with a dividend payment history of 195 years.
The bank’s dividend has grown by 5% annually in the last 15 years, and its yield is 5.3%.
Bank of Montreal’s diverse businesses deliver resilient earnings. Further, the bank’s growing deposit base, high-growth wealth management business, stable credit performance, solid balance sheet, and operational efficiency position it well to grow earnings and dividends over the next decade. The bank plans to increase its earnings per share by 7-10% annually over the medium term, driving its payouts.
