2 Canadian Dividend Stars Set for Strong Returns

After rising more than 28% last year, the S&P/TSX Composite Index is up around 4% so far this year as of January 19. Interest rate cuts, improving corporate earnings, and favourable commodity prices have supported Canadian equity markets. However, concerns surrounding ongoing geopolitical tensions, sticky inflation, the impact of trade barriers on global growth, and elevated valuations continue to weigh on the outlook.

Against this uncertain backdrop, investors may consider adding quality dividend stocks to fortify their portfolios and generate reliable passive income. Moreover, dividend-paying stocks have historically outperformed non-dividend-paying peers and tend to be less prone to market uncertainty. With that in mind, let’s take a look at two top dividend stocks that are well-positioned to deliver attractive returns.

Enbridge

Enbridge (TSX:ENB) stands out as an attractive dividend stock to buy right now, supported by its stable cash flows from contracted operations, long track record of dividend growth, and visible growth prospects. The company operates more than 200 revenue-generating assets and businesses, with approximately 98% of adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) derived from regulated assets and long-term contracts. As a result, Enbridge has minimal exposure to commodity price fluctuations, while roughly 80% of its adjusted EBITDA is inflation-indexed, providing a natural hedge against rising prices.

These characteristics underpin Enbridge’s ability to generate consistent, reliable cash flows, enabling the company to pay dividends for more than 70 years and increase its dividend for 31 consecutive years. With a quarterly dividend of $0.97 per share, Enbridge currently offers a compelling forward dividend yield of about 5.88%.

Looking ahead, Enbridge continues to expand its asset base through a $37 billion secured capital program, with the majority of projects expected to enter service by 2029. Management plans to invest $9–$10 billion annually to advance these initiatives. Supported by this expansion, Enbridge expects its adjusted EBITDA, distributable cash flow per share, and adjusted EPS (earnings per share) to increase at an annualized rate of approximately 5% over the medium term. Given these growth prospects and its strong cash flow profile, Enbridge appears well-positioned to sustain dividend growth, thereby delivering healthier returns in the coming years.

Fortis

Another dividend stock that appears to be an excellent buy right now is Fortis (TSX:FTS), a regulated natural gas and electric utility serving approximately 3.5 million customers. The vast majority of its asset base is regulated, with about 94% tied to low-risk transmission and distribution operations. As a result, Fortis’s financial performance is relatively insulated from economic cycles and commodity price volatility. In addition, the company has consistently expanded its rate base at a healthy pace, supporting steady earnings growth and long-term share price appreciation. Over the past decade, Fortis has delivered an average annual total shareholder return of 11.2%.

Fortis also boasts an exceptional dividend track record, having increased its dividend for the previous 52 consecutive years. At current levels, the stock offers a forward dividend yield of approximately 3.53% as of the January 19 closing price.

Looking ahead, Fortis plans to invest $28.8 billion between 2026 and 2030, targeting an annualized rate-base growth of 7% to reach $57.9 billion. Combined with favourable customer rate revisions and ongoing improvements in operating efficiency, these investments should support continued earnings and dividend growth. Management expects to increase the dividend by 4–6% annually through 2030, reinforcing Fortis’s appeal as a reliable income stock in the current market environment.

The post 2 Canadian Dividend Stars Set for Strong Returns appeared first on The Motley Fool Canada.

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More reading

• Is Enbridge Stock or Telus the Better Buy for Canadians?
• Get Set for Success: My Top 2 Canadian Stock Picks for 2026
• Cautious Investors: 2 Safer Stocks to Consider for TFSA Wealth
• Where Will Enbridge Stock Be in 5 Years?
• TFSA 2026: 1 Stock to Help Turn Your $7,000 Contribution Into a Dividend-Growth Powerhouse

Fool contributor Rajiv Nanjapla has no position in any of the stocks mentioned. The Motley Fool recommends Enbridge and Fortis. The Motley Fool has a disclosure policy.