Written by Robin Brown at The Motley Fool Canada
Dividend stocks have not exactly performed great in 2023. Elevated interest rates are starting to take a toll on the profitability of many debt-heavy dividend stocks. Likewise, some investors are preferring safer passive-income alternatives like bonds and GICs (Guaranteed Investment Certificates) since interest yields are higher.
GICs don’t have the capacity to generate capital returns over long periods of time. If you want safety, income, and capital growth, these three Canadian stocks could be a good fit for your portfolio.
Brookfield Asset Management stock: A long-term, dividend-growth stock in the making
Brookfield Asset Management (TSX:BAM) is one of the premium asset management platforms in the world. The company has $850 billion of assets under management (AUM).
Given its relationship with Brookfield Corporation, it has ownership expertise and experience managing a wide array of alternative assets (real estate, infrastructure, renewables, private equity, credit, and insurance).
It provides unique investment solutions for major investment institutions globally. However, it is also moving into private wealth, which could be an additional growth engine. Over 90% of its AUM is invested in long-term strategies.
Currently, the company has $440 billion of fee-bearing capital. However, it has ambitions to hit $1 trillion of fee-bearing capital in the coming five years. That would project an 18% compounded annual growth rate looking forward.
As a result, it also expects to more than double its fee-bearing earnings over the next five years. Given the company has a cash-rich balance sheet, it plans to distribute 90% of its income back to shareholders.
Today, this dividend stock yields 3.5%. If management can do what it says, shareholders are up for great growth in income and capital over the years ahead.
Brookfield Infrastructure: A mix of growing utilities
One of the subsidiaries that happens to be managed by BAM is Brookfield Infrastructure Partners (TSX:BIP.UN). It is a great dividend stock if you want exposure to safe, economically critical, utility-like infrastructure assets.
The company is positioning for major trends like de-globalization, de-carbonization, and digitization. Along with its investments in a massive U.S. semiconductor facility, it recently acquired two large data centre portfolios. It is also adding a major container shipping/terminal business to its already substantial port and transportation business.
So far, it has grown its funds from operation (FFO) per unit by 10% this year. That is on top of low to mid-teens growth in both 2021 and 2022.
Today, this dividend stock yields 4.89%. It has grown its dividend by an approximate 6% annual rate for the past few years. For a company with great assets, a good balance sheet, and stable growth, this is a safe long-term bet.
Fortis stock: Decades of dividend growth
If you want to go very conservative, Fortis (TSX:FTS) is about as safe a stock that you can find. This stock has now executed 50 consecutive years of annual dividend growth. That track record is a testament to the quality of its business and its assets.
Fortis operates 10 regulated power and gas utilities across North America. For a decade, it has compounded earnings per share by around 5.7% a year. It has also grown its dividend by a similar rate. Investors have earned a compounded total return of around 9% for the past decade.
That is a pretty attractive return, given that this company operates in a very conservative, low-risk manner. Fortis continues to believe it can grow by a 5-6% rate, and it expects its dividends to continue rising in a similar fashion.
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Fool contributor Robin Brown has positions in Brookfield, Brookfield Asset Management, and Brookfield Infrastructure Partners. The Motley Fool recommends Brookfield, Brookfield Asset Management, Brookfield Corporation, Brookfield Infrastructure Partners, and Fortis. The Motley Fool has a disclosure policy.