Top Canadian dividend stocks generate regular passive income, add stability, and provide steady capital gains, making them compelling long-term investments. While investing in dividend stocks, investors should focus on companies with solid distribution track records, a growing earnings base, and visibility over future dividend growth.
Against this background, here are five fundamentally strong Canadian dividend stocks everyone should own.
Source: Getty Images
Canadian dividend stock #1
Fortis (TSX:FTS) is a top TSX dividend stock to own. The Canadian utility company operates a rate-regulated electric utility business that generates growing and predictable cash flows. Fortis consistently rewards its shareholders with higher dividend payments thanks to its resilient cash flows. Fortis increased its dividend for 51 consecutive years. Moreover, Fortis projects a 4-6% annual dividend growth through 2029.
Notably, 93% of Fortis’s operations are in energy transmission and distribution, a low-risk segment known for delivering stable returns across economic cycles. Fortis anticipates expanding its rate base at a compound annual growth rate (CAGR) of 6.5% through 2029, driving earnings and dividends higher. Alongside its dependable payouts, Fortis stock offers an attractive yield of approximately 4%.
Canadian dividend stock #2
Enbridge (TSX:ENB) is another solid bet for worry-free dividend income. This energy infrastructure company benefits from its highly diversified portfolio that consistently generates solid distributable cash flows (DCF), supporting higher payouts. Enbridge has increased its dividend annually for 30 consecutive years. Moreover, its current payouts translate into a high yield of 5.9%.
The company’s dividend growth is expected to continue at a mid-single-digit pace, supported by higher system utilization, long-term contracts, and regulated cost-of-service tolling frameworks. Additionally, Enbridge is expanding its utility asset base, which is likely to generate stable cash flows and provide resilience during market fluctuations. Furthermore, its growing investments in renewable energy assets position the company to meet rising energy demand and drive long-term shareholder value.
Canadian dividend stock #3
Hydro One (TSX:H) is a must-own Canadian dividend stock for steady income and growth. This utility company’s 99% of operations are rate-regulated, enabling it to generate a steady and predictable earnings stream. Moreover, as a pure-play electric power transmission and distribution business, Hydro One has no exposure to power generation or the volatility of commodity prices.
Thanks to its defensive business model and growing rate base (forecasted to grow at a CAGR of 6% through 2027), Hydro One’s earnings will likely increase by 5-7% annually. This growth is expected to support a 6% annual increase in dividends during this period. In addition to providing reliable income, Hydro One consistently generates strong capital gains for investors.
Canadian dividend stock #4
TC Energy (TSX:TRP) is a compelling dividend stock for starting a growing passive-income stream. The company benefits from its highly regulated and contracted asset base, which generates resilient cash flows in all market conditions. Given its ability to grow its earnings and cash flows, TC Energy has increased its dividend at a CAGR of 7% since 2000.
Looking ahead, TC Energy’s high asset utilization rate, multi-billion secured capital projects, productivity savings, and debt reduction will enable it to further enhance its shareholder value through higher payouts. The company projects a 3-5% annual increase in its dividends over the long term. Moreover, it offers an attractive yield of 5.6%.
Canadian dividend stock #5
Income investors should own leading Canadian bank stocks for solid dividend income. Bank of Montreal (TSX:BMO) stands out among the top banks for its stellar dividend payment history. This financial services giant has distributed dividends for 195 consecutive years, longer than any other Canadian company. Moreover, Bank of Montreal’s dividend grew at a CAGR of 5% in the past 15 years.
Bank of Montreal’s diversified revenue stream, growing loans and deposit base, steady credit performance, and improving efficiency will continue to drive its earnings and dividend payments. The bank sees high single-digit earnings growth over the medium term, which will support its future dividend growth. Moreover, it offers a high yield of 4.4%.
