Our Top 5 Canadian DGI Stocks

Got to Love Dividend Growth Investing. Once you buy the stocks, there really isn’t much you need to do if they are great companies. Set them to Drip and forget it. The stocks keep doing their thing and as the dividend growth name implies they raise those payouts every year, It’s a beautiful thing.

Unlike the States, Canada is kind of limited on stocks. We are heavy Utilities, Energy, Financial’s and Basic Materials although our tech game is getting stronger. We do have some great dividend growth stocks though! These are our top 5 Canadian dgi Stocks.

#5 – Telus – Ticker symbol – T

Telus is one of Canada’s leading telecommunications companies. While covid has been devastating to so many businesses Telus continues to increase their earnings and branch to new opportunity’s. Telus Health in particular is one I’m excited about and can easily continue to grow.

Telus isn’t officially a wide moat stock but they have the best customer service ratings in the business. Once you sign up with them, there’s a good chance your sticking with them.

They have raised their dividend the past 16 years and recently raised their dividend at the start of the month by 6.84%, so will be 17 years now.

Their 10 year dividend growth rate is 9% but their 5 year is 8.2%. A solid dividend growth rate followed with 5% starting yield and some capital appreciation to boot. They are targeting a 7-10% dividend growth rate until 2022 for now.

#4 – Td – Ticker symbol – Td

Canada’s second largest bank and one of 2 wide moat banks. (other being Royal) Td has been a great investment for us and I love their US exposure as well. This is a big reason it makes the list vs the other Canadian banks. While the us exposure has hurt the bank recently, news of Biden and vaccine hopes have propelled the stock the last month.

You really can’t go wrong with Canadian Banks as an investment, they have done very well over the long term but dividend growth may be stunted until the economy get more secure. Canada’s banking regulator recently cautioned against lifting restrictions on banks dividend payments and share buybacks incase covid spikes again.

Luckily Td is one of the first banks to announce their raise and boosted theirs 6.8% in February this year before covid blew up and regulators restricted things. So they will be the only bank that could raise theirs in 2020.

Td has raised their dividend the past 9 years and sports a 5 year dividend growth rate of 9.5% but their 3 year sits at 10.2% so we can they have been very shareholder friendly. After their recent run up they still offer a great 4.48% starting yield.

#3 – Enbridge – Ticker symbol – Enb

We all know they dominate the oil and natural gas pipeline space but they will be a major renewable energy player as well. Enbridge has committed 7.8 billion dollars to this space and once these projects are done completion they will generate enough energy to power 946,665 homes!

They are currently one of our largest holdings. I love this stock and in a market full of overpriced stocks, this one is cheap. Why is that? Well we currently aren’t driving/ flying etc as much and the world is transitioning to renewable energy. Investment dollars have jumped ship. But I think this is overdone and we will still be using traditional energy for a long time. The Line 3 replacement is now only one step away from construction and as I stated earlier they will be moving towards more renewable energy projects.

Enbridge is a wide moat stock. It is sooo wide that I can’t ever leave them. They supply the natural gas to heat our water and run that furnace. I can’t call anyone else, they are the only player. Got to love owning stocks that you have to pay monthly.

They have treated me very well from a dgi point of view but the stock price hasn’t. Last month the price was the cheapest its been in 5 years. (I bought more)

Enbridge has raised their dividend for the last 24 years and most likely they will in December yet again. Their 10 year dividend growth is a mouth watering 14.8% but their 3 year has dropped to 11.7%. Still great but I expect that dividend growth rate to slow for a couple years as they pay back some debt. In the meantime if you bought today you would get a staggering 7.84% starting yield.

#2 – Brookfield Renewable Partners – Ticker symbol – Bep.un

Our best performing stock of the portfolio! To say this stock has treated us well would be a understatement. We are up 290% and that doesn’t even include the bepc.un spin off that I sold at around 81 to lower our exposure to them. Clearly a big mistake but brookfield renewable still makes up 6.4% of our entire portfolio.

• Note bepc is the same company but was made to give investors greater flexibility tax wise basically.

As I mentioned earlier the world wants more renewable energy and investment dollars keep heading this way. Who can argue clean energy? This is a space that everyone should have in their portfolio for the long term.

Do I think they are overvalued atm? For sure, but bep operates one of the world’s largest publicly-traded renewable power platforms and people are willing to pay for that exposure.

The company is a global leader in hydroelectric power, which comprises approximately 64% of its portfolio. It is also an experienced global owner and operator of, and investor in, wind, solar, distributed generation, and storage facilities. (Source – Brookfield Renewable Website)

From a dividend growth perspective they have consistently raised their dividend for 10 years and have a 10 year growth rate of 5.1% and they plan on raising their dividend by 5-9%. One of the lower growth rates of the bunch, but what it lacks in dividend growth it has made up in capital appreciation. The stock will forgo a 3 for 2 stock split on dec 11th as well.

 

#1 – Canadian National Railway – Ticker symbol – CNR

My #1 stock got to be cnr. I absolutely love this company. Wide moat, capital appreciation and great dividend increases. Don’t let that low starting yield scare you off.

CN is a world-class transportation leader and the only transcontinental railway in North America. Our 19,600-mile network spans Canada and Mid-America, connecting three coasts: the Atlantic, the Pacific and the Gulf of Mexico. We offer fully integrated rail and other transportation services, including intermodal, trucking, freight forwarding, warehousing and distribution. (Source – CN website)

Look at those tracks, they have such a massive range and connecting to 3 coasts gives them so much shipping options. Railways are so critical to our economy, they ship a wide range of products and are the most cost effective way to ship something. (besides pipelines) They are not congested by traffic and can pull a tonne of trailers.

In my opinion CNR is one of the safest investments you can make as well. The tracks are already in place, so its unlikely a competitor would or could place lines along them. The capital required to do that would be huge. I have heard electric self driving trucks will take a dent out of railways earnings in the future but I don’t see that happening as the roads would get congested and they just can’t pull as big of a load.

CNR has raised its dividend every year since it’s IPO 25 years ago November 17th 1995. So they currently have a 24 year dividend growth streak. Their 10 year dividend growth sits at 15.6% and their 5 year is even higher at 16.5%. This is a stock you can buy and barely look at, they treat shareholders very well.

This is another stock that seems overvalued at the moment but I will gladly buy more on a dip.

Conclusion

Well that concludes our Our Top 5 Canadian DGI Stocks. These are all stocks I feel you can set it and forget it. With the green energy movement Enbridge is the highest risk of the 5 but I feel the risk reward ratio is too hard to pass up currently. All 5 of these stocks are in our portfolio.

Fortis and Canadian Utilitys deserve a mention for sure as they sport the top 2 longest Canadian dividend growth streaks at 48 years (cu) and 46 years with fortis.

Honorable Mentions

I asked the community on twitter what their top 5 Canadian dgi stocks were. Here are some other company’s mentioned that I didn’t include in my top 5 or mention above.

Canadian Tire, Bell Canada, Toromont Industries, Ccl Industrys,  Alimentation Couche-Tard, Emera, Brookfield Asset Management, Brookfield Property Partners, Brookfield Infrastructure Partners, Bank of Nova Scotia, Royal Bank, Algonquin Power, Canadian Pacific Railway, TC Energy, BMO, Capital Power Corp, Go Easy Financial, Exchange Income Corporation, Restaurant Brands International

Clearly a huge range of companies. Personal finance is just that, personal. We all have our favourites.. Which are your Top 5 Canadian DGI Stocks?

Cheers!