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3 Dividend Stocks Long-Term Investors Shouldn’t Sleep on

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Written by Chris MacDonald at The Motley Fool Canada

Finding high-quality dividend stocks is an excellent way investors can sleep at night, while protecting their portfolio in times like these. Companies able to pay dividends are more likely to have the margins to cushion the blow of rising prices. As far as defensiveness goes, these companies are among the best options in this difficult environment.

However, there are many options to choose from in the market.

Here’s why I think Fortis (TSX:FTS)(NYSE:FTS)Algonquin Power (TSX:AQN)(NYSE:AQN), and Restaurant Brands (TSX:QSR)(NYSE:QSR) are all great choices right now.

Top dividend stocks: Fortis

Fortis is one of the oldest utilities companies in North America. More importantly, for dividend investors, this company has an incredible track record of raising its distribution every year. For nearly five decades, that’s been the case. Accordingly, Fortis earns top marks in my books as far as dividend growth goes.

The company’s diversified business model involves regulated electric and gas utility businesses in the U.S., Canada, and the Caribbean. These businesses are extremely stable as far as cash flow generation go and provide for reasonable growth long term. In times like these, more investors may flock to higher-stability options like Fortis.

Those seeking a reliable (and growing) divided yield of around 3.4% may want to look at Fortis stock right now.

Algonquin Power

Another utility company I think is one of the dividend stocks is overlooked in the market right now is Algonquin Power. This utility company is very diversified, with a range of businesses spanning power generation to water management facilities. Accordingly, this is somewhat of a more difficult company to assess.

That said, Algonquin’s growth profile has been much better than its peers. Over the past five years, the company’s stock price has moved approximately 50% higher, beating the market return by more than 10 points. Additionally, Algonquin has also managed to raise its dividend distribution, on average, by double-digit percentages each and every year.

That’s solid. Accordingly, for those looking for a 5.1% dividend yield, Algonquin is a great place to start.

Restaurant Brands

Sticking with the stability argument, what’s more stable than fast food? Even if we’re headed into a recession, folks need to eat. And lower-cost dining options will become even more important for a greater percentage of the population.

Restaurant Brands is the parent company of Burger King, Tim Hortons, Popeyes Louisiana Kitchen, and Firehouse Subs. This conglomerate has some of the best banners in the business. However, its results have underwhelmed investors of late, who are clearly looking for more growth.

That said, with upcoming menu innovation and an expansion of the company’s loyalty program and locations, I think growth is likely to continue long term. Those looking for a dividend yield of 4.2% in a defensive sector will want to consider this dividend stock.

The post 3 Dividend Stocks Long-Term Investors Shouldn’t Sleep on appeared first on The Motley Fool Canada.

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Fool contributor Chris MacDonald has positions in ALGONQUIN POWER AND UTILITIES CORP. and Restaurant Brands International Inc. The Motley Fool recommends FORTIS INC and Restaurant Brands International Inc.

2022

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