3 Canadian Dividend Stocks With Passive Income That Keeps Growing

Canadian investors hunting for passive income that quietly grows in the background don’t have to overcomplicate things. Three high‑quality, dividend‑growth names stand out right now: Fortis, Canadian National Railway, and Canadian Natural Resources.

Fortis

Fortis (TSX:FTS) is a top Canadian utility giant that I think long-term investors seeking a top dividend stock can easily consider right now.

The company’s 3.3% dividend yield pales in comparison to its long-term dividend growth track record, which stands at more than 51 years. Indeed, with a rock-solid business model, this is a company that’s about as close as it gets to a bond‑like stock with an equity kicker.

The utility giant owns 10 regulated electricity and gas businesses across North America, producing highly predictable cash flows. These cash flows have continued to support a strong payout ratio (under 75%) and mid-single-digit dividend growth rates in recent decades I expect will continue for some time.

Over the past five years, Fortis’ revenue has grown roughly 6% annually and its dividend about 5% per year. That’s right in line with management’s guidance. So, for investors who want rising income, they don’t have to babysit. Fortis looks attractive at today’s valuations, especially as rate‑cut expectations ease the pressure on defensive utilities.

Canadian National Railway

Canadian National Railway (TSX:CNR) is another top pick that I think investors can sleep easily at night owning over the long term.

The company provides investors with a different flavour of dividend growth. In short, this is a stock that provides a lower upfront yield but higher long‑term compounding. CN Rail operates a coast‑to‑coast network linking the Atlantic, Pacific and Gulf coasts, moving essential freight through every part of the economic cycle. That network is extraordinarily hard to replicate, giving CN strong pricing power and one of the best operating ratios in North America.

The company has a long history of annual dividend increases on the back of disciplined capital allocation and consistent free‑cash‑flow growth. Volumes are tied to broad drivers like population, trade, and industrial activity, rather than any single commodity, which helps smooth earnings over time.

Thus, with a solid balance sheet and room for both buybacks and dividend hikes, CN offers investors a growing income stream plus meaningful capital‑gain potential as earnings climb.

Canadian Natural Resources

Canadian Natural Resources (TSX:CNQ) is the last name on this list. That said, it’s a stock I think could actually be one of the best-performing names on this list, for a number of reasons.

First, I think it’s worth acknowledging that this is a stock best-suited for investors willing to accept a bit more volatility in exchange for faster growth. That’s because this is a stock that’s uniquely tied to commodity prices, which have been on the rise of late.

Of course, every commodities cycle is different, and we could see an unwinding of recent trends that have taken CNQ stock higher. That said, I do think there are strong underlying fundamentals supporting the company’s current distribution and solid expectations for future dividend hikes down the line.

Indeed, Canadian Natural has raised its dividend annually for roughly a quarter-century. And with a yield of around 3.9% at the time of writing, I think the company’s revenue growth rate of around 18% and its valuation, which is still near relative lows, suggest this is a stock that could have material upside from here.

Importantly, the company’s management team has shown a clear commitment to returning excess cash to shareholders through both dividends and repurchases, especially as debt has come down. If oil prices remain constructive, investors could see a combination of special returns, steadily rising base dividends, and long‑term production growth. That’s exactly the kind of setup income investors look for when they want passive income that doesn’t just stay flat, but keeps growing year after year.

The post 3 Canadian Dividend Stocks With Passive Income That Keeps Growing appeared first on The Motley Fool Canada.

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Fool contributor Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool recommends Canadian National Railway, Canadian Natural Resources, and Fortis. The Motley Fool has a disclosure policy.