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Canada’s Best Dividend-Growth Stocks for 2019 and Beyond

Mat Litalien, MBA
growing dividends

As 2018 comes to a close, we’ll look at some of the best dividend-growth stocks in Canada. These are Canadian Dividend Aristocrats that have storied histories of raising dividends.

Not only do they have reliable histories of dividend growth, but they have a high growth rate and the ability to maintain a high rate well into the future. This makes them top picks in 2019 and beyond.

Waste Connections (TSX:WCN)(NYSE:WCN)

This North American waste and recycling collection company has been on fire. Whereas the TSX Index has struggled, Waste Connections has been a solid investment in 2018. The company’s share price has risen by 10.24% over the past year and has returned 33% on average over the past five years.

On top of its outperformance, Waste Connections has raised dividends by 15% on average over the past five years. It’s a rate that has remained relatively steady. In October, the company raised dividends by 14.5%. Waste Connections has a reasonable payout ratio of 30%, which all but guarantees future raises in line with historical averages.

Enghouse Systems (TSX:ENGH)

This little-known software company has quietly been a top performer. Over the past year, it has returned 6.23%, outperforming the TSX Index. Its five-year return of 18.54% is also far and above the Index average.

Enghouse has a 12-year dividend-growth streak, tops among all tech-listed peers. It has consistently raised dividends in the mid to high teens. This past year, the company raised dividends by 12.50%. Look for another double-digit raise this coming March. Its payout ratio is only 34%, and the company is expected to post double-digit earnings growth in 2019.

Enbridge (TSX:ENB)(NYSE:ENB)

Unlike the other two on the list, Enbridge has been a dog. The company hasn’t recovered since its Spectra Energy acquisition and has been saddled with high debt. Year to date, it has lost 21% of its value. The good news is, the company has taken significant steps to simplify its corporation. In turn, this will lead to greater efficiencies and cost savings.

You might be wondering why Enbridge is on the list when bears have questioned the safety of its dividend. Don’t worry, it’s safe. Through the first nine months of the year, dividends accounted for only 65% of discounted cash flow.

Enbridge has a 22-year streak of dividend growth, which places it among the top 10 longest dividend-growth streaks in Canada. It has consistently raised dividends by double digits and will do so through at least 2020 as per company guidance. As it has closed the acquisitions of its sponsored vehicles, the company estimates the achieved synergies will enable 10% dividend growth through 2020.

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Fool contributor Mat Litalien owns shares of ENBRIDGE INC. Enbridge is a recommendation of Stock Advisor Canada. Enghouse is a recommendation of Hidden Gems Canada.