My Top Canadian Dividend Stocks You’ll Want to Own Forever

If you are new to investing and want to build a long-term portfolio, there is no need to get into creating one that requires constant monitoring and rebalancing. When you invest with a long investment horizon, you can ignore the impact of short-term market volatility, like what we are seeing right now amid the war in the Middle East.

Stock markets are cyclical in nature. Even the most well-established blue-chip stocks can experience downturns with the rest of the market. However, those with solid fundamentals can bounce back when markets recover and deliver substantial returns in the long run to investors who remained invested.

Today, I will discuss two Canadian dividend stocks that can find a place in many investment portfolios for the long run.

Algonquin Power & Utilities

Algonquin Power & Utilities Corp. (TSX:AQN) is a utility stock boasting a $6.4 billion market capitalization. The company is an investment holding company primarily engaged in generating energy and distributing water. The Canadian utility market is a highly rate-regulated industry that lets companies like Algonquin generate steady and stable earnings, even amid high volatility in the economy.

While it is not immune to the impact of broader market downturns, it is well-equipped to navigate the resulting financial pressure and continue distributing its quarterly payments to investors. Facing pressure from higher interest rates, Algonquin was struggling to improve its balance sheet. However, it reduced the debt load by around US$1.6 billion by selling off part of its renewable energy business.

The company plans to invest capital to grow its rate base by 5% to 6% by 2028. As of this writing, the stock trades for $8.34 per share and pays investors US$0.09 per share each quarter, translating to a 4.3% annualized dividend yield.

Enbridge

Enbridge Inc. (TSX:ENB) is one of the biggest players in the Canadian energy infrastructure and utility segments. The Calgary-headquartered $160 billion market-cap energy infrastructure company owns and operates one of the most extensive pipeline networks in North America. It transports around a fifth of the crude produced and consumed in the region.

Enbridge also has a growing renewable energy business and one of the largest utility businesses in the region under its belt. The company generates healthy cash flows through all its business segments, especially the regulated utility business. Backed by solid revenues, it is unsurprising that Enbridge is a dividend-paying stock with an over 30-year dividend-growth streak.

As of this writing, Enbridge stock trades for $73.33 per share. It pays investors $0.97 per share each quarter, translating to a juicy 5.3% dividend yield that you can lock into your portfolio today.

Foolish takeaway

If you build a portfolio of dividend stocks and hold them in a Tax-Free Savings Account (TFSA), you will be investing with after-tax dollars. Due to the tax-sheltered status of the account, it allows you to keep all the returns from any capital gains and dividend distributions. By reinvesting the dividends to buy more shares, you can unlock the power of compounding to accelerate your wealth growth.

To this end, Algonquin Power stock and Enbridge stock can be excellent long-term holdings to consider for your self-directed investment portfolio.

The post My Top Canadian Dividend Stocks You’ll Want to Own Forever appeared first on The Motley Fool Canada.

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More reading

• 5 TSX Dividend Stocks I’d Buy If the TSX Pulls Back
• Transform Your TFSA Into a Cash-Generating Machine With $10,000
• How to Make Your Money Last Through 30 Years of Retirement
• Enbridge vs Suncor: The Dividend Pick I’d Own Through 2026
• Down 56%, Should Investors Buy This High-Yield Dividend Stock in May?

Fool contributor Adam Othman has no position in any of the stocks mentioned. The Motley Fool recommends Enbridge. The Motley Fool has a disclosure policy.