Additionally, if these companies pay you dividends and have the ability to steadily increase payouts, investors can also benefit from a steady stream of passive income in addition to capital gains.
Let’s take a look at two of those dividend paying stocks on the Toronto Stock Exchange that you can buy and hold indefinitely.
Algonquin Power & Utilities
The move towards clean energy solutions is accelerating, with actions such as Algonquin Power & Utilities (TSX: AQN) (NYSE: AQN) Best bets for your portfolio right now. Renewable energies are expected to overtake all energy sources by 2050, according to a report by the United States Energy Information Administration, and their share will rise to 28% from just 15% in 2018.
Algonquin derives 33% of its revenues from renewables and the remainder from rate-regulated utilities. Despite extreme weather conditions in Texas during the March quarter, AQN’s revenue increased 36% year-on-year, while Adjusted EBITDA increased 17% in the first quarter.
The company has managed to increase its dividends at an annual rate of 10% over the past decade, making it one of the largest dividend-growing stocks on the Toronto Stock Exchange. It aims to invest more than $ 9 billion in capital spending through 2025, which will increase AQN’s cash-generating capacity and lead to further increases in dividends.
AQN stock has a tasty 4.5% dividend yield and has also gained nearly 420% in market value over the past 10 years, easily outpacing the gains of the S&P 500, which has returned 302% since July 2011.
Speaking on the corporate earnings call, AQN Chief Financial Officer Arthur Kacprzak said, “Our first quarter financial results continue to demonstrate the benefits of Algonquin’s diverse and resilient business model, comprised of services Stable regulated utilities supplied in 16 jurisdictions, from a renewable energy portfolio under long-term contract. assets and an extensive development pipeline.
Another TSX heavyweight that has created substantial wealth for long-term investors is Fortis (TSX: FTS) (NYSE: FTS). This Canadian utilities giant has increased its dividends every year for 47 consecutive years, demonstrating its recession-proof business model and ability to generate cash flow through economic cycles.
In the first quarter of 2021, Fortis reported net income of $ 355 million. Its adjusted earnings per share reached $ 0.77, down from $ 0.68 the previous year. The company attributed the profit growth to an increased rate base and higher profits in Arizona.
Fortis spent $ 900 million on capital spending in the first quarter and confirmed it remains on track to spend $ 3.8 billion in 2021.
In addition, Fortis plans to spend $ 19.6 billion in capital spending over the next five years, which will allow it to increase its mid-year rate base to $ 36.4 billion by 2023. and $ 40.3 billion by 2025, up from $ 30.5 billion in 2020. These investments will allow Fortis to continue to increase dividend payouts to investors in the years to come.
Foolish contributor Aditya Raghunath owns shares of ALGONQUIN POWER AND UTILITIES CORP. and FORTIS INC. The Motley Fool recommends FORTIS INC.