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Investors seeking income through their investments might consider shares of fundamentally strong companies offering reliable dividend payouts. Fortunately, the TSX hosts several TSX dividend stocks emphasizing returning cash to shareholders through increased distributions, making them reliable investments for worry-free passive income.
Here are three unstoppable Canadian stocks that could pay you for life:
Enbridge (TSX:ENB):
Enbridge, a Canadian energy infrastructure company, is known for its durable dividend distributions regardless of economic conditions. The company has been paying dividends for nearly seven decades and has raised its dividend for 29 consecutive years at a compound annual growth rate (CAGR) of 10%. Enbridge offers a compelling yield of 7.6% based on its closing price of $48.36 on March 8.
Diversified revenue sources, high asset utilization, power purchase agreements, and regulated cost-of-service tolling frameworks position Enbridge well to generate solid distributable cash flow (DCF) per share, supporting its payouts. The company expects adjusted EBITDA to grow at a CAGR of 7-9% in the medium term, with EPS forecasted to grow by 4-6% annually, enabling mid-single-digit dividend growth in the coming years.
Fortis (TSX:FTS):
Fortis, an electric utility company, offers solid dividend distribution history and visibility over future payouts. Operating a regulated and defensive business, Fortis generates predictable cash flows, enhancing shareholder returns through higher dividend payments. With a history of raising dividends for 50 consecutive years, Fortis stock is less volatile amid market swings. The company aims to expand its rate base, expecting it to increase at a CAGR of 6.3% through 2028, enabling dividend growth at a CAGR of 4-6% during the same period. Fortis offers a decent yield of 4.4%.
Toronto-Dominion Bank (TSX:TD):
Investors seeking reliable dividend payouts could consider shares of top Canadian banks like Toronto-Dominion Bank. The bank has paid dividends uninterrupted for 167 years and has increased dividends at a CAGR of about 10% since 1998, the highest among its peers. Supported by consistently growing earnings, Toronto-Dominion Bank's diversified revenue sources, high-quality assets and deposit base, robust balance sheet, and focus on efficiency improvement enable it to deliver solid earnings and increase distributions.
With a sustainable payout ratio of 40-50%, the bank stands to benefit from growing loans, a well-diversified deposit base, solid credit quality, operating leverage, and strategic acquisitions. Investors can earn a reliable dividend yield of over 5% by investing in Toronto-Dominion Bank stock at current levels.
Conclusion:
Investing in fundamentally strong companies that prioritize dividend payments can provide investors with a reliable source of passive income. Enbridge, Fortis, and Toronto-Dominion Bank are three Canadian stocks known for their consistent dividend distributions and long-term growth potential. With their solid track records, diversified revenue sources, and prudent financial management, these companies offer investors the opportunity to earn steady returns and build wealth over time. Whether seeking high yields or steady dividend growth, these stocks represent compelling options for investors looking to generate income for life while navigating the ups and downs of the market.
