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Market uncertainty due to new U.S. trade policies has TSX investors wondering which stocks are good to buy to ride out volatile times. One popular strategy involves buying top Canadian dividend stocks with long track records of delivering distribution growth through challenging market cycles.
Enbridge
Enbridge (TSX:ENB) trades near $63 per share at the time of writing. The stock is up nearly 30% in the past 12 months and sits close to its record high just above $65.
Movements in the share price in the past three years have largely responded to interest rate changes in Canada and the United States. Aggressive rate hikes in the second half of 2022 and through 2023 put pressure on pipeline stocks. Enbridge slipped from $59 in June 2022 to around $44 in the fall of 2023. As soon as the central banks signalled they were done raising rates, bargain hunters started to move in on the anticipation of rate cuts in 2024. Once those cuts began, Enbridge picked up a new tailwind.
Management continues to drive growth through acquisitions and organic projects. The current $26 billion capital program, along with cash flow from recent acquisitions, should support ongoing dividend increases. Enbridge raised the payout in each of the past 30 years. Investors who buy the stock today can get a dividend yield near 6%.
Canadian Natural Resources
Falling oil prices have pushed down the share price of Canadian Natural Resources (TSX:CNQ) from $56 last April to as low as $38 a few weeks ago. The stock is now back up to $44 but is still down 14% in the past 12 months. Contrarian investors with a long-term bullish outlook for oil and natural gas might want to start nibbling while the stock is out of favour.
CNRL has the financial firepower to add new assets at discounted prices and is adept at moving capital around the portfolio to get the best returns based on market conditions. This is largely why the board has been able to boost the dividend in each of the past 25 years.
Investors who buy CNQ stock at the current level can get a dividend yield of 5.3%.
Fortis
Fortis (TSX:FTS) is one of those stocks you can buy and simply forget for years. The utility company has power generation, electricity transmission, and natural gas distribution businesses in Canada, the United States, and the Caribbean. Nearly all the revenue comes from rate-regulated assets, so cash flow tends to be predictable and reliable.
Fortis is working on a $26 billion capital plan that will raise the rate base from $39 billion in 2024 to $53 billion in 2029. The resulting boost to cash flow should support planned annual dividend increases of 4% to 6% over that timeframe. The board has increased the dividend every year for more than five decades.
Investors who buy FTS stock can get a dividend yield of nearly 3.8% at the current share price.
The bottom line on top TSX dividend stocks
Enbridge, CNRL, and Fortis are good examples of stocks that can raise their dividends in difficult economic conditions. If you have some cash to put to work, these stocks deserve to be on your radar.
