7 Best Dividend Kings in Canada (May 2024): Consistency is Key

How do you choose the perfect dividend stocks for your portfolio? Different investors have different answers to this question.

For some, it’s a high yield. For others, it might be a decent combination of capital appreciation potential and dividends.

However, there is one factor that is important for all dividend investors – Sustainability.

And when you are looking for stocks that offer the highest degree of reliability and sustainability potential, a dividend king is the most elite class of dividend stocks you can go for.

So if sustainability is your top priority, you should look into the best dividend kings in Canada.

Dividend Kings In Canada – A Contentious Topic

Dividend kings – The elites among the aristocrats. Dividend kings are normally described as dividend companies that have grown their payouts for 50 consecutive years. However, that definition is more apt for older markets than the Canadian one.

By this standard, Canada didn’t have a dividend king by 2022, though two companies, Canadian Utilities and Fortis, are quite close to the finish line to be adopted into this elite group.

There is another issue when it comes to picking out the best dividend kings in Canada.

And it’s that unlike our watered-down criteria for dividend aristocrats – five years of consecutive dividend growth, there are no fixed criteria for dividend kings.

So for this list, I’ve set my own criteria for dividend kings – Companies that have grown their payouts for over 25 years, which is the US definition for dividend aristocrats.

This yields a small group of companies, which can be powerful additions to your portfolio and more than just dividend stocks.

Best Dividend Kings In Canada

The Canadian dividend kings on this list all trade on the TSX and the US ones on the NYSE.

1. Canadian Utilities Stock

Canadian Utilities Stock
  • Ticker: CU.TO
  • Sector: Utilities
  • Industry Niche: Electricity/Utility Infrastructure
  • Forward Dividend Yield:4.45%
  • Dividend Payout Ratio: 85.41%
  • Dividend Yield (12-Month Trailing): 5.93%
  • Upcoming Dividend Date: Mar 01, 2024
  • Market Cap: $8.20 Billion
  • Forward P/E Ratio: 12.8

Canada, has been raising its payouts since 1972. And the dividend growth is more than just symbolic.

In the last decade, the company almost doubled its payouts to investors. The payout ratio is also usually quite healthy, though not always neatly on the safe side.

It’s a strong player in the energy infrastructure and utility space, with about $20 billion worth of assets to its name. It’s also into the retail energy business, though the bulk of the company’s income comes from its utility business.

Its customer base is quite diversified as well, with over 260,000 electricity and 1.2 million natural gas customers in Alberta and about 766,000 natural gas customers in Australia.

The diversity and dividend history makes it a powerful and reliable dividend investment that you can potentially hold for decades. The yield is usually juicy enough though the capital appreciation is modest at best.

2. Fortis Stock

Fortis Stock
  • Ticker: FTS.TO
  • Sector: Utilities
  • Industry Niche: Regulated Utilities
  • Forward Dividend Yield: 3.56%
  • Dividend Payout Ratio: 79.92%
  • Dividend Yield (12-Month Trailing): 4.31%
  • Upcoming Dividend Date: Mar 01, 2024
  • Market Cap: $25.62 Billion
  • Forward P/E Ratio: 15.68

Fortis is cut from nearly the same cloth as Canadian Utilities, though there are few pronounced differences.

The company has been growing its payouts since 1973 and is in line to become a true dividend king in Canada. Its dividend payout ratio remains even safer though the yield is relatively lower.

Its dividend growth is decent enough, roughly 75% in the last decade.

Fortis has an impressive asset base of about $58 billion and an even impressive reach, with ten distinct utility operations via ten different companies. Its geographic diversity is more regional, with operations in the US and Caribbean.

The consumer base is quite enormous and more electric-leaning, i.e., 2.1 million electric customers and 1.4 million natural gas customers. 99% of the company’s operations are regulated, which offers even more strength to the company’s financial and sustainability of its payouts.

Fortis also offers a decent capital appreciation potential, which perfectly compliments its payouts.

3. Toromont Industries Stock

Toromont Industries Stock
  • Ticker: TIH.TO
  • Sector: Industrial  
  • Industry Niche: Heavy Equipment and Refrigeration
  • Forward Dividend Yield: 1.45%
  • Dividend Payout Ratio: 33.18%
  • Dividend Yield (12-Month Trailing): 1.4%
  • Upcoming Dividend Date: Jan 04, 2024
  • Market Cap: $9.66 Billion
  • Forward P/E Ratio: 18.95

While not nearly as old as Fortis or Canadian Utilities, Toromont is the third-oldest dividend aristocrat in Canada, which has been growing its payouts since about 1989 and has been continuously paying dividends since 1968.

Its dividend growth has been quite impressive. In the last ten years, the company has grown its payouts by well over 3x. And its payout ratio didn’t even breach 50% once in the last decade.

The company has two businesses, a heavy equipment group where it dominates the Canadian market, and the refrigeration business.

The equipment group is further split into seven separate companies, including Toromont CAT, one of the largest CAT equipment dealers in the world.

This group makes up most of the company’s revenue, and there is quite a healthy split between equipment sales and product support.

Even though Toromont is a top pick when it comes to dividend growth, it’s not a great choice from a yield perspective.

However, its capital appreciation potential balances things out quite neatly. The stock price has seen over 400% price appreciation in the last decade alone.  

4. Metro Stock

metro Stock logo
  • Ticker: MRU.TO
  • Sector: Consumer Staples 
  • Industry Niche: Groceries and Pharmacies  
  • Forward Dividend Yield: 1.56%
  • Dividend Payout Ratio: 22.21%
  • Dividend Yield (12-Month Trailing): 1.79%
  • Upcoming Dividend Date: Mar 12, 2024
  • Market Cap: $15.54 Billion
  • Forward P/E Ratio: 14.44

Metro is another one of the oldest dividend aristocrats in Canada and has been growing its payouts for over 25 years, though it’s over two decades away from becoming a true dividend king.

Its dividend history is quite stellar and only hit one bump in the last decade (2020). Its payout ratios have remained under 30% in the same period, and it has grown its payouts by well over 300%.

Metro is in the evergreen business of food and health, with an extensive network of 950 grocery stores and 650 pharmacies in Canada. The company operates under multiple banners.

It has an impressive regional presence, and as one of the largest players in its industry, it offers a lot of stability to its investors.

So its dividends are not safe simply by virtue of its history and payout ratio, but thanks to its business model as well.

The stock does fall short in one area, i.e., yield, though its capital appreciation potential makes up for it.

And thanks to its dividend growth streak, it might be a viable passive income investment, despite its relatively lower yield.

5. Empire Company Stock

Empire Company Stock
  • Ticker: EMP-A.TO
  • Sector: Consumer Staples 
  • Industry Niche: Food Retailing and Real Estate
  • Forward Dividend Yield: 1.73%
  • Dividend Payout Ratio: 21.43%
  • Dividend Yield (12-Month Trailing): 2.03%
  • Upcoming Dividend Date: Jan 31, 2024
  • Market Cap: $8.29 Billion
  • Forward P/E Ratio: 10.48

The company has been raising its payouts almost consistently since 1994. In the last ten years, the dividends almost doubled, making it more than just symbolic and enough to outpace inflation.

Apart from a few harsh years, the payout ratio history of the company has been quite stable.

As the proud owner of Sobeys, the second-largest food retailer in Canada, the company offers a lot of business and financial stability, which translates to healthy and reliable dividends.

The Sobeys network alone consists of over 1,500 stores. Two other businesses of the company are fuel retailing (over 350 stores) and real estate. It has a sizeable stake in Crombie REIT.

Apart from a massive slump in 2015, not unlike the fall energy companies suffered during the same period, the stock has mostly seen steady growth.

Its capital appreciation potential is usually a better reason to buy the company compared to its yield.

However, it is still one of the best dividend kings in Canada, thanks to its sustainability potential and dividend growth.

6. Enbridge Stock

  • Ticker: ENB.TO
  • Sector: Energy   
  • Industry Niche: Pipelines/Energy Transportation and Natural Gas Utility
  • Forward Dividend Yield: 6.21%
  • Dividend Payout Ratio: 140.66%
  • Dividend Yield (12-Month Trailing): 7.56%
  • Upcoming Dividend Date: Mar 01, 2024
  • Market Cap: $98.56 Billion
  • Forward P/E Ratio: 15.3

Enbridge is the leader in the energy sector, the largest energy company in Canada (by market cap), and one of the largest pipeline companies in the world.

It’s also one of the oldest dividend aristocrats in Canada and has been growing its payouts since 1995.

And even though its annual dividend growth rate has been 10% so far, the company is now going for a more realistic, 3% dividend growth rate going forward. That is likely to bring its payout ratios down to relatively safer levels.

Enbridge is responsible for moving a significant portion of the total natural oil produced in North America and one-fifth of the natural gas consumed in the US.

It also has a massive natural gas business with 3.9 million connections (Residential and commercial).

The company is also heavily investing in renewables through its power generation capacity is not on par with its other credentials.

Enbridge stock’s capital appreciation potential has been non-existent for a while. Even in a positive market, the stock’s growth is quite modest. Its yield, however, is unparalleled, especially for such an old aristocrat.

7. Canadian National Railway Stock

Canadian National Railway Stock
  • Ticker: CNR.TO
  • Sector: Industrial    
  • Industry Niche: Railway
  • Forward Dividend Yield: 1.78%
  • Dividend Payout Ratio: 37.02%
  • Dividend Yield (12-Month Trailing): 1.83%
  • Upcoming Dividend Date: Mar 28, 2024
  • Market Cap: $109.26 Billion
  • Forward P/E Ratio: 18.83

Canadian National Railway has been growing its payouts since 1996. It also has a strong track record when it comes to dividend sustainability (trough payout ratio).

The dividend growth is one of the most impressive on this list, just a little shy of 4x in the last decade.

As one of the two railway giants, Canadian National Railway plays an important role in the local supply chain of North America. The tracks under its control connect three coasts and go all the way through the East Coast of the US.

It serves nine ports, including two inland ports. The company has been smart enough to diversify its business and also holds one of the largest trucking fleets in Canada.  

U.S Dividend Kings

If you are interested in adding some true dividend kings to your portfolio from south of the border, there are four you should consider starting with.

1. Procter & Gamble Stock

Procter & Gamble Stock
  • Ticker: PG
  • Sector: Consumer Staples   
  • Industry Niche: Household Products
  • Forward Dividend Yield: 2.52%
  • Dividend Payout Ratio: 60.63%
  • Dividend Yield (12-Month Trailing): 2.38%
  • Upcoming Dividend Date: Feb 15, 2024
  • Market Cap: $367.71 Billion
  • Forward P/E Ratio: 22.42

Procter & Gamble, the second-largest consumer goods company in the world (after Nestle), has been growing its payouts since 1957. It usually offers a decent enough yield which is slightly magnified by the difference in currency.

The company is simply massive, with brands like Pampers, Tide, and Gillette under its banner. Its safety and security come from the fact that its products can be found in almost all corners of the world.

If you combine that with its stellar dividend history and its modest but reliable long-term capital appreciation potential, it becomes a dividend king worth holding for decades.

2. 3M Stock

3M Stock
  • Ticker: MMM
  • Sector: Industrials     
  • Industry Niche: A Wide Range of Products
  • Forward Dividend Yield: 4.04%
  • Dividend Payout Ratio: 82.96%
  • Dividend Yield (12-Month Trailing): 6.34%
  • Upcoming Dividend Date: Mar 12, 2024
  • Market Cap: $51.21 Billion
  • Forward P/E Ratio: 9.07

If you are looking for a higher-than-average yield among the select group of US-based dividend kings, 3M would be your best bet. It has been growing its payouts since 1958.

The company has an impressive range when it comes to products in its portfolio (around 60,000) and the industries/market it caters to. It’s both a B2B and B2C company.

This diversity, a widespread customer base, and an innovative approach make 3M a powerful long-term holding, mostly for its payouts. The capital appreciation angle has been on hold since 2017 (hence the high yield).

3. Coca-Cola Stock

Coca-Cola Stock
  • Ticker: KO
  • Sector: Consumer Staples      
  • Industry Niche: Beverages
  • Forward Dividend Yield: 2.78%
  • Dividend Payout Ratio: 78.18%
  • Dividend Yield (12-Month Trailing): 3.05%
  • Upcoming Dividend Date: Dec 15, 2023
  • Market Cap: $256.59 Billion
  • Forward P/E Ratio: 21.12

Coca-Cola is one of the five largest beverage companies in the world that sells around 1.9 billion servings in 200 countries each day. It has over 200 brands to its name and has been a powerhouse of growth since its inception in the late 1800s.

The company has been growing its payouts since 1962, making it one of the oldest dividend kings in the US.

The stock is a powerful combination of capital appreciation potential and dividends that are sustained not just by its stellar history but by its financial health as well, which in turn, relies on the company’s impressive global presence.

4. Johnson & Johnson Stock

Johnson & Johnson Stock
  • Ticker: JNJ
  • Sector: Healthcare      
  • Industry Niche: Pharmaceuticals
  • Forward Dividend Yield: 2.64%
  • Dividend Payout Ratio: 62.74%
  • Dividend Yield (12-Month Trailing): 2.98%
  • Upcoming Dividend Date: Mar 05, 2024
  • Market Cap: $376.67 Billion
  • Forward P/E Ratio: 14.17

Johnson & Johnson is one of the largest healthcare companies in the world and one of the three main names when it comes to baby care products.

It has also been growing its payouts since 1962, and the growth is usually enough to outpace inflation, even at the current high levels.

Pharmaceuticals, especially for such trusted names as JNJ, is an evergreen business.

And JNJ’s strength goes beyond a typical pharmaceutical company, as a significant portion of its revenue comes from baby products, which is a thriving market not bound by the same rules as medicine.

The stock offers a decent combination of capital appreciation potential and dividends, leaning more heavily towards the former.

How To Buy Dividend Kings In Canada

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Best Dividend Kings in Canada

The dividend kings above, both Canadian and American, can help you create a powerful passive income portfolio.

The dividend growth will attempt to keep pace with inflation, and the capital appreciation potential that most of the best dividend kings in Canada (and the US) offer can potentially ensure the growth of your nest egg at a decent enough pace.

If the frequency of payments is important to you, then these monthly dividend stocks might be a better fit for you.

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Author Bio - Christopher Liew is a CFA Charterholder with 11 years of finance experience and the creator of Wealthawesome.com. Read about how he quit his 6-figure salary career to travel the world here.

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