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Secure This Real $3,434 Income Stream With Just an Average RRSP — Plus Annual Growth

Brian Pacampara, CFA
Dad and son having fun outdoor. Healthy living concept

Hi there, Fools. I’m back again to highlight three top dividend growth stocks. As a quick refresher, I do this because businesses with consistently increasing dividend payout can guard against the harmful effects of inflation by providing a growing income stream and tend to outperform the market averages over the long haul.

The three stocks below offer an average dividend yield of 3.4%. So if you spread them out evenly in a $101K RRSP account, the group will provide you with a growing $6,800 annual income stream.

Let’s get to it.

Electric opportunity

Leading off our list is electricity and natural gas provider Canadian Utilities (TSX:CU), which has delivered an incredible 47 straight years of dividend growth.

The company supports that streak through its highly regulated revenue stream, large economies of scale ($21 billion in assets), and diversified business model (electricity, pipelines, and retail energy). In the most recent quarter, Canadian Utilities posted adjusted earnings of $200 million vs $181 million in the year-ago period.

“Stronger earnings were mainly due to increased Alberta power market prices, ongoing growth in the regulated rate base, and cost efficiencies in the natural gas and electricity distribution utilities,” the company said in its earnings release.

Shares of Canadian Utilities are up 19% in 2019 and offer a healthy dividend yield of 4.4%.

Chugging along

With 24 consecutive years of dividend increases, railroad giant Canadian National Railway (TSX:CNR)(NYSE:CNI) is next on our list.

CN’s industry-topping operating ratio, impossible-to-copy railroad network, and massive scale efficiencies continue to drive robust results for shareholders. In the most recent quarter, revenue increased 11% and adjusted EPS grew 17% while operating cash flow spiked 32% to $997 million.

Management even reaffirmed its full-year outlook for high single-digit volume growth in terms of revenue ton miles.

“Despite a prolonged period of historic cold temperatures in key segments of our network, CN railroaders delivered record first-quarter carload volumes, adding $350M of top-line growth, while improving year-over-year car velocity,” said President and CEO JJ Ruest.

CN shares are up 19% in 2019 and offer a yield of 1.6%.

Through the wire

Rounding out our list is telecom gorilla Telus (TSX:T)(NYSE:TU), which has raised its dividend for 15 consecutive years.

Telus’ significant cost advantages, wireline network quality, and wireless growth opportunities should continue to keep its coffers stuffed with cash. In the most recent quarter, revenue improved 3.8% and free cash flow before taxes clocked in at $504 million.

On that strength, management raised the dividend 3.2% while targeting 7%-10% annual growth for 2020-2022.

“TELUS achieved strong financial and operational results in the first quarter, including high quality smartphone-centric mobile phone net additions and vigorous connected device growth in wireless, alongside ongoing robust wireline customer growth,” said President and CEO Darren Entwistle.

Telus shares are up 11% in 2019 and offer a scrumptious yield of 4.3%.

The bottom line

There you have it, Fools: three attractive dividend growth stocks worth checking out.

As always, they aren’t formal recommendations, but are simply a starting point for more research. The snapping of a dividend growth streak can be especially painful, so plenty of due diligence is still required.

Fool on.

More reading

Brian Pacampara owns no position in any of the companies mentioned. The Motley Fool owns shares of Canadian National Railway. CN is a recommendation of Stock Advisor Canada.

The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool Canada’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Motley Fool Canada 2019

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