This is a guest post by Harvi Sadhra with hashtag investing
There is a lot of talk today about overheating in the stock markets. The whole world is watching whether the US Federal Reserve will take steps to cool rising interest rates or whether it will let the game play.
With talk of a market decline on the TSX, it makes sense for investors to look at dividend stocks and even recession-proof stocks as a steady source of passive income. Here are 3 of the TSX’s top dividend stocks.
Top Canadian Dividend Stock # 1: Enbridge (ENB)
This midstream giant is on several analysts’ lists as a buy-and-hold forever stock. In fact, the company’s investors are so confident that some of their $ 100 million bond investors are willing to wait 91 years. That’s right, investors are willing to wait until 2112 for a 4.7% maturity.
The company announced its fourth quarter and full year 2020 results. Adjusted EBITDA was at the level of 2019, while the DCF (distributable cash flow) increased by 2%.
The company realized savings of $ 300 million in 2020 excluding government programs and is targeting savings of $ 100 million in 2021. It has a secured growth pipeline of USD 16 billion and is targeting annual DCF growth of 5 to 7% through 2023.
Rising oil prices will increase both profits and profits for this midsize king as oil producers will increase production, meaning there is more oil in Enbridge’s pipelines. The best thing about Enbridge is that the stock has a high dividend yield of 7.51%. It has been increasing its payouts in a row for the past 26 years and it looks like it’s not going to stop.
Enbridge is also expanding its renewable energy portfolio to prepare for the long term. It recognizes that the world is going to be green and began planning it a long time ago. It has 43 renewable projects in North America and Europe. Of its growth backlog of 12.6 billion US dollars, around 1.6 billion US dollars are expected to be completed as offshore wind energy over the next three years.
Top Canadian Dividend Stock # 2: Fortis (FTS)
Fortis is one of the largest utility companies in the world with a dividend record few others can match: it has increased its dividend for 47 consecutive years. That gives you an idea of the consistency and predictability of the business. And the company delivers a dividend payout of 4.03%. The company posted adjusted net income of $ 1.19 billion, or $ 2.57 per share, down from $ 1.11 billion or $ 2.55 per share in 2019.
In September 2020, Fortis launched its $ 19.6 billion five-year capital plan, which reflected approximately $ 4 billion in annual utility investments. David G. Hutchens, President and CEO, said in the call for results, “Virtually all of our planned investments are regulated and consist of a diverse mix of highly executable, low-risk projects that are required to maintain and upgrade our energy infrastructure.”
The interest base is projected to increase from $ 30.5 billion in 2020 to over $ 40 billion in 2025, an increase of $ 10 billion. This is an average annual growth rate of approximately 6%. Fortis is also confident that it will implement its forecast for average annual dividend growth of 6% through 2025. Few companies are in a position to deliver this forecast for dividend growth.
The reason Fortis is trusted is because it operates $ 50 billion worth of utilities in the United States, Canada and the Caribbean. As CEO Hutchens indicated, almost all customers are rate regulated, which gives the company confidence to accurately predict its finances. Recession or no, pandemic or no, people still have to turn on the lights at home. Fortis is as safe as it comes.
Canadian Dividend Stock # 3: TC Energy (TRP)
TC Energy is another midstream stock that is considered a safe haven for investors. It has increased its dividend over the past 21 years and its current yield is a strong 6.25%. The company owns North America’s largest natural gas pipelines and transports over 25% of the continent’s natural gas needs. It is a key player in every natural gas business on the continent.
The company was at a disadvantage with the suspension of its Keystone XL oil pipeline project when US President Joe Biden revoked a key permit for the project under construction. While the company was disappointed with the decision, CEO François Poirier emphasized that the company had a “large and diversified asset base”.
TC Energy announced its fourth quarter and full year 2020 earnings. Comparable earnings for the fourth quarter of 2020 were $ 1.1 billion, or $ 1.15 per share, compared to $ 970 million, or $ 1.03 per share, in 2019. Earnings for 2020 were 3.9 Billion USD 2019.
The company announced that investments would be $ 7 billion in 2021. A high material fee will be charged for the first quarter of 2021 thanks to Keystone’s cancellation. TC Energy is also building the Coastal GasLink pipeline in British Columbia and said project costs are expected to increase significantly due to delays and the COVID-19 pandemic.
Thank you for reading this article. Please send feedback, corrections, or questions to [email protected]