The idea of holding a stock for life only works if the business you are investing in can keep changing with the world around it. Simply put, more than a solid past, the company needs assets that remain useful, management willing to invest, and enough financial strength to keep rewarding shareholders along the way.
In this article, I’ll look at two fundamentally strong Canadian dividend stocks that combine steady payouts with businesses that could stay relevant for decades.
AltaGas
If you want a Canadian dividend stock backed by essential infrastructure and a growing business, AltaGas (TSX: ALA) could be a compelling stock to focus on. This Calgary-based energy infrastructure firm operates through its Midstream and Utilities businesses. Its operations include natural gas utilities, processing, fractionation, and storage.
After gaining 22% over the last year, ALA stock trades around $53 per share with a market cap of $16.5 billion and a 2.5% annualized dividend yield.
More importantly, AltaGas is backing that market performance with improving results. In the June quarter, its normalized EBITDA (earnings before interest, taxes, depreciation, and amortization) climbed 14% year-over-year (YoY) to $391 million.
Its Midstream business provided much of that growth. The company’s segment normalized EBITDA jumped 33% YoY to $285 million as global export volumes and margins improved, and Pipestone II added to results. AltaGas also exported a record 144,420 barrels per day of liquefied petroleum gases to Asia, up 13% YoY.
In addition, AltaGas continues to invest for the future. Its REEF Phase I was about 85% complete, while the new Northeast British Columbia liquids expansion and Groundbirch Rail Terminal initiatives should further expand the company’s Midstream footprint.
Growing earnings, expanding infrastructure, and regular dividends give AltaGas many of the qualities long-term investors want from a stock they can own for decades.
Brookfield Renewable Partners
Another dividend stock built around strong assets that could remain important for generations is Brookfield Renewable Partners (TSX: BEP.UN).
This company operates a large global portfolio spanning hydroelectric, wind, utility-scale solar, distributed energy, storage, and other sustainable solutions.
At the time of writing, its units traded around $40 per unit with a market cap of roughly $19 billion. Its units have risen about 10% over the last year and currently offer an attractive 5.5% yearly distribution yield.
Despite some recent market volatility, Brookfield Renewable’s underlying business continues to grow. In the second quarter, its funds from operations (FFO) reached a record US$421 million, up 13% YoY. The hydroelectric segment was especially strong, with the company’s FFO reaching US$336 million. Strong generation from its Canadian fleet, solid performance in Colombia, and gains from asset recycling helped drive those results.
Last quarter, Brookfield Renewable committed or deployed about US$5 billion, including an agreement to acquire Aypa for roughly US$3 billion. Its battery storage platform has about 3,000 megawatts of operating and under-construction assets, along with a large development pipeline.
For long-term dividend investors, Brookfield Renewable offers a 5.5% yield with a diversified global power portfolio and an extensive development pipeline. Those qualities make it an attractive dividend stock to keep in a portfolio through multiple market cycles.