These Dividend Stocks Offer Unmatched Stability and Decades of Growth
For investors building a portfolio for the long haul, dividend growth stocks are a powerful tool for wealth creation. These are companies that not only pay a dividend but consistently increase that payout year after year. This track record is a strong indicator of financial health, disciplined management, and confidence in future earnings. Over time, a rising dividend provides an increasing income stream that outpaces inflation, while reinvested payments can dramatically accelerate the power of compounding.
These stocks are often mature, stable businesses in essential sectors, making them defensive cornerstones during market volatility. Among the most reliable dividend growth stocks on the TSX are two utility giants, Fortis (TSX:FTS)(NYSE:FTS) and Canadian Utilities (TSX:CU), which have rewarded shareholders for over half a century.
Fortis
Fortis stands as a premier example of a low-risk, high-quality investment. The regulated utility company boasts a remarkable 51-year streak of consecutive dividend increases, a track record that few companies can match. This consistency is a testament to its stable business model, which generates predictable revenue by providing essential electricity and gas services.
Fortis offers more than just stability; it provides a compelling growth story. The company’s $26 billion five-year capital plan is expected to support an annualized growth rate of 6.5% through 2029. This growth is reflected in its dividend, which has increased from 47.75 cents per share in 2020 to 61.5 cents today, a 29% jump that represents a compounded annual growth rate of 5.2%. With a modest payout ratio of 72%, Fortis has ample room to continue this trend, and another increase is likely to be announced soon.
In 2025, the stock has climbed 24% and has an exceptionally low beta of 0.35, making it a stellar option for capital preservation.
Canadian Utilities
With an incredible 53 consecutive years of dividend increases, Canadian Utilities (TSX:CU) holds the longest track record of any publicly traded Canadian company. This unmatched history cements its status as a true Dividend King and a top choice for investors prioritizing a high current yield, which stands at an attractive 4.6%. Its stock is up 14% this year, and its low beta of 0.57 also signifies its defensive nature.
However, the pace of its dividend growth has slowed considerably. Its current quarterly payment of 45.77 cents is up just 5% from the 43.54 cents it paid in 2020, equating to a compounded annual growth rate of only 1%. This suggests the company may be raising its payout just enough to extend its streak. A more pressing concern is its payout ratio, which is over 100% of its earnings, raising questions about the long-term sustainability of the dividend without significant earnings improvement.
Which dividend stock is the better buy today?
While both stocks are excellent choices for stable, long-term dividend income, Fortis currently appears to be the superior option. Its strong and sustainable dividend growth, backed by a significant capital investment plan and a healthy payout ratio, presents a more attractive outlook than Canadian Utilities’ slower growth and strained payout. For retirees and long-term, dividend-focused investors, Fortis offers a compelling combination of safety, income, and future growth potential.