If you are an investor who expects to generate regular cash flow, even during lean years, consider buying dividend-paying stocks. While many TSX stocks pay dividends, only a few are worth investing.
So if you have $ 500, consider buying stocks like Enbridge (TSX: ENB) (NYSE: ENB), Fortis (TSX: FTS) (NYSE: FTS), and Canadian public services (TSX: CU). These dividend aristocrats have businesses that consistently generate strong profits and cash flow. In addition, their payments are secure and sustainable in the long term.
Enbridge is one of the the most reliable stocks for income investors and offers a high return. It has been paying dividends regularly for over 66 years. Meanwhile, Enbridge has increased its dividend at a 10% CAGR over the past 26 years. It currently offers a high yield of around 6.9% and has a sustainable dividend payout rate of 60-70% of its DCF (Distributable Cash Flow). With its resilient cash flow, Enbridge expects to generate an average annual total shareholder return of 13% in the coming years, which is encouraging.
I believe Enbridge remains on track to reward its shareholders with a higher annual dividend. Enbridge’s diversified cash flow, firm purchase agreement, cost savings and productivity savings are likely to drive future earnings and dividends. In addition, its $ 17 billion guaranteed capital program is expected to generate approximately $ 2 billion in additional EBITDA per year. In addition, the continued dynamics of the gas and renewable energy activities, the recovery in main grid volumes and the improvement in energy demand allow it to post solid financial results and should support its payments.
Fortis is another premium dividend game for income investors. In addition, its low risk activity adds stability to its portfolio. In particular, Fortis’ dividend has increased in each of the past 47 years. Additionally, he expects his dividend to grow at an average annual rate of 6% through 2025.
Fortis pays a quarterly dividend of $ 0.505 per share and offers a decent yield of 3.6%. Fortis’ dividend payments are supported by its heavily contracted and regulated assets and a growing price base. Its high-quality assets generate predictable cash flow, adding visibility into its future payments. I expect the growth in its rate base, continued investments in renewable energy and infrastructure, and strategic acquisitions to provide a solid foundation for future dividend growth.
Canadian public services
Canadian Utilities is a essential dividend stocks for investors looking to generate regular income. Notably, this utility company has a record dividend increase for the longest period (for 49 consecutive years) of any publicly traded Canadian company and currently offers a healthy dividend yield of over 5%. In addition, its payments are very secure and sustainable in the long term.
Canadian Utilities derives its profits from rate regulated and contract assets, which positions it well to pay consistently higher dividends. In addition, Canadian Utilities’ continued investment in rate regulated assets provides a solid foundation for exceptional earnings and dividend growth. The company’s high-quality asset base, contractual framework, improved energy infrastructure business and cost savings bode well for future growth.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We are straight! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer, so we post sometimes articles that may not conform to recommendations, rankings or other content. .
Foolish contributor Sneha Nahata has no position in any of the stocks mentioned. The Motley Fool owns shares and recommends Enbridge. The Motley Fool recommends FORTIS INC.