This Dividend Stock Is Set to Beat the TSX Again and Again

Unlike many investors who have been (rightly) rewarded by holding only growth stocks over most of the past two decades, I’m of the view that holding top-tier dividend stocks is a great idea.

There’s the diversification thesis behind holding companies with varying business models and capital return profiles. But in my experience, companies that pay dividends tend to have rock-solid balance sheets and cash flow profiles that are preferable during downturns or periods of volatility. It’s my opinion that we’re likely to see more volatility in 2026 than we saw last year (and it wasn’t a year that was without bumps, that’s for sure).

So, with that in mind, let’s dive into my top dividend pick in the market right now for long-term investors.

Fortis

Fortis (TSX:FTS) is a Canada-based utility giant that’s seen very solid capital appreciation over recent years.

Looking at the chart above, it’s clear that there were certainly a few years when investors didn’t make money holding this stock. From Fortis’ peak in mid-2022 to around early 2024, this stock was actually down. Those were the years when I continued to pound the table on Fortis, due primarily to viewing this company’s underlying dividend growth profile as valuable.

A few years ago, Fortis was inching toward the 50-year mark in terms of consecutive years of dividend increases. The company has since surpassed this key metric, making Fortis one of the top Dividend Kings in Canada, and setting this stock up for essentially dividend increases in perpetuity (or as long as it exists).

With a solid balance sheet and the ability to support continued dividend increases (which I expect to come in around the 7% or so annual rate by which Fortis has raised its dividend over the past few decades), this is a stock with plenty of dividend growth potential aside from its current yield of around 3.5%.

It’s not just about dividends when it comes to Fortis

The other key component I think many investors are focusing more closely on these days is the fact that Fortis isn’t only one of the best dividend stocks Canada has to offer, but it’s also an indirect play on the AI trade.

Given the amount of power we’re going to need for AI, machine learning, quantum computing, robotics, autonomous driving and nearly any other growth tailwind in our economy these days, we’re going to need more electricity distribution from companies like Fortis. That’s a strong underlying growth tailwind this company hasn’t had in the past, and I’d suggest that’s why FTS stock has seen the kind of appreciation it has.

The thing is, I can see a situation in which Fortis will need to build out more infrastructure to serve potentially more profitable corporate clients across North America and the Caribbean over time. For those in the same boat, this is a top-tier dividend stock that certainly warrants consideration as a core portfolio holding, in my books.

The post This Dividend Stock Is Set to Beat the TSX Again and Again appeared first on The Motley Fool Canada.

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More reading

• Got $2,000? 4 Dividend Stocks to Buy and Hold Forever
• 3 Safe Dividend Stocks to Own in Any Market
• Your 2026 TFSA Game Plan: How to Turn the New Contribution Room Into Monthly Cash
• Canadians: Here’s How Much You Need in Your TFSA to Retire
• 3 Blue-Chip Dividend Stocks for 2026

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.