These Dividend Growth Stocks Should Have Totally Impressive Total Returns

Among the key considerations investors looking at top-tier dividend stocks will consider is, of course, the ultimate yield an investor expects to receive today. However, I’ve long argued that what can impact investors to a much greater degree over the long term, if the intention is indeed to hold positions for an extended period of time, is how quickly (and often) dividend-paying stocks increase their distributions to investors.

In this piece, I’m going to highlight three of the top Canadian dividend stocks, by dividend growth historical track records.

Let’s dive in!

Canadian Utilities

In the energy distribution space, Canadian Utilities (TSX:CU) is among the top-tier companies I continue to watch.

Much of that has to do with the company’s 4.4% dividend yield and 52-year track record of dividend increases, among the longest on the TSX. With a solid business centred around electricity and natural gas distribution, as well as renewables, pipelines and liquids businesses, Canadian Utilities is a top way for investors to gain exposure to the energy and utilities markets, all in one place.

Importantly, Canadian Utilities has exposure to many markets outside of Canada, with Australia being a key focal point for this company. That’s something that should benefit investors looking for greater international exposure and geographic diversification over the long term.

Fortis

No surprise here, but Fortis (TSX:FTS) makes another appearance as a top dividend growth stock pick on my list of must-watch stocks.

Fortis has been on a tear of late, with much of this stock’s recent rise a result of increasing growth expectations. To a certain extent, I believe the market has started to understand the growth narrative around companies like Fortis, and I think this share price surge makes sense. However, for those thinking really long term, the impacts that rising electricity and natural gas prices could have for companies like Fortis could be understated.

That’s because Fortis has become among the most efficient players in its sector, with strong margins and a rock-solid balance sheet supporting capital redistribution to shareholders. For 52 consecutive years now, Fortis has raised its dividend. Impressively, the company has done so at a mid-single-digit clip over this period. Enough said.

Canadian National Railway

Canada has no shortage of top-tier blue-chip companies to choose from. But among the top railroad operators I continue to think are solid long-term bets is Canadian National Railway (TSX:CNR).

Shares of the top Canadian railroad have declined considerably since their recent peak in early 2024. Much of that move has come amid concerns that economic growth in North America could decline, and there are reasons to believe that the market isn’t overreacting on that front.

That said, I do think this company’s long-term total return profile remains impressive. And given this stock’s valuation at just 18 times trailing earnings (much lower than historical levels) and a higher dividend yield of 2.7% today, there’s more impetus for dividend investors to consider this stock on that front alone.

Additionally, I think Canadian National’s 28-year track record of raising dividends should bode well for investors who are able to pick up this stock with a juicier yield. In my view, this is a company that could easily have a 4%–5% dividend yield off of an investor’s base today, for those who choose to add exposure to this name. On top of capital appreciation upside, that could imply double-digit long-term returns in a sector most describe as boring. I think that’s an exciting opportunity, but that’s just me.

The post These Dividend Growth Stocks Should Have Totally Impressive Total Returns appeared first on The Motley Fool Canada.

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More reading

• Young Investors: 2 Excellent Starter Stocks for Your TFSA
• Invest $20,000 in 2 TSX Stocks for $880 in Passive Income
• 5 of the Best TSX Dividend Stocks to Buy Under $100
• 1 Marvellous Dividend Stock Down 5% to Buy and Hold Forever
• Got $1,000? 2 Top Canadian Stocks to Buy for a TFSA Right Now

Fool contributor Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool recommends Fortis. The Motley Fool has a disclosure policy.