The TSX has several high-quality dividend stocks with a strong track record of reliable payouts. These companies can be excellent choices for investors seeking steady income.
However, I’ll focus here on Canadian stocks that not only pay dividends but also have the potential to increase them year after year.
Resilient businesses back these companies, maintain sustainable payout ratios, and have a strong history of rewarding shareholders through different economic conditions. In other words, they are the kind of stocks investors can feel comfortable holding for the next five years.
Top dividend stock #1: Fortis
Fortis (TSX:FTS) is one of the top dividend stocks to hold for the next five years. As a regulated electric and gas utility, Fortis generates predictable cash flows and has a long history of rewarding shareholders.
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It has increased its annual dividend for 52 consecutive years, highlighting the stability of its business and commitment to dividend growth.
Looking ahead, the utility company appears well positioned to continue returning more cash to shareholders. Fortis’s diversified portfolio of regulated utility businesses and investments in its existing operations provide a solid base for growth.
Fortis’s $28.8 billion five-year capital plan is expected to increase the company’s rate base to $57.9 billion by 2030, representing approximately 7% compound annual growth. A growing rate base should provide the foundation for higher earnings and support management’s target of 4–6% annual dividend growth through 2030.
Beyond its current capital plan, Fortis has additional avenues for expansion. These include increasing investment in the U.S. electric transmission network, developing renewable natural gas and LNG infrastructure, and upgrading energy infrastructure to accommodate rising electricity demand across its markets.
For investors looking for reliable income, steady dividend growth, and stability, Fortis remains an attractive investment.
Top dividend stock #2: Bank of Montreal
Canadian banking giants have long been known for their dependable dividend payments. Among the leading financial institutions, Bank of Montreal (TSX:BMO) stands out for its impressive 197 consecutive years of dividend payments. Moreover, BMO has grown its dividend at a 5.7% compound annual growth rate over the past 15 years.
The bank’s diversified revenue base, disciplined cost management, and a strong balance sheet drive its bottom line and distributions. Further, it maintains a sustainable payout ratio.
Looking ahead, BMO appears well positioned for continued earnings growth, which will support its payouts. Expansion in loans and deposits, rising fee income, operating efficiency, and a well-capitalized balance sheet should provide a solid foundation for earnings and dividend growth.
Bank of Montreal is also investing in digital technologies and artificial intelligence (AI), which could further improve productivity and reduce costs over time, supporting its bottom line.
Top dividend stock #3: Enbridge
Enbridge (TSX:ENB) is one of the most reliable dividend stocks to hold for the next five years. The energy infrastructure company has a long track record of rewarding shareholders, having paid dividends for more than 70 years and increased its annual payout every year since 1995. In addition to reliable dividends, Enbridge stock offers a compelling yield of 5.4%.
Enbridge’s broad portfolio spanning liquids pipelines, natural gas infrastructure, gas utilities, and renewable power generates relatively stable earnings and distributable cash flow (DCF). Moreover, Enbridge’s revenue is supported by regulated assets and long-term take-or-pay contracts. This operating structure adds resilience against commodity price fluctuations and generates steady earnings and DCF.
Enbridge targets a sustainable payout ratio of 60%–70% of its DCF, which allows it to return substantial capital to investors while retaining enough cash to fund expansion projects.
Looking ahead, its earnings and DCF per share are expected to grow at a mid-single-digit rate. If that growth materializes, Enbridge could increase its dividend at a similar pace. Enbridge’s $41 billion secured capital plan, highly utilized infrastructure, investments in attractive expansion projects, and long-term demand for energy infrastructure position it well to drive earnings and DCF and, in turn, distribute higher dividends.