In the current environment, it makes sense to look for the best dividend payers who will continue to increase their payouts even if the economy slides into recession.
Fortis
Fortis (TSX:FTS) is trading near $72.50 at the time of writing, which is not far off its 12-month high around $74.
The stock is up more than 20% through 2025, largely due to interest rate cuts and a strong capital program. Fortis uses debt to finance some of its growth initiatives. The reduction in financing costs should lead to higher profits and could free up more money for dividends or debt reduction.
Fortis is working on $29 billion in capital projects that will increase its interest base at a compound annual rate of approximately 7% over five years. As the new assets come into service, the increase in cash flow should support planned annual dividend increases of 4% to 6% through 2030. That is a good guideline in an uncertain economic climate.
Investors who buy FTS shares at the current price can get a dividend yield of 3.5%.
Canadian natural resources
Canadian natural resources (TSX:CNQ) is trading near $46 per share at the time of writing. The stock traded at $55 last year but retreated on weaker oil prices. Analysts broadly expect the global oil market to remain in surplus until 2026 as production growth outpaces rising demand.
That said, CNQ remains very profitable at current oil prices. West Texas Intermediate (WTI) oil is trading at $57 per barrel at the time of writing. Last year it was over $80. CNRL says the WTI breakeven price is between $40 and $45.
The company continues to grow its profits through production growth thanks to strategic acquisitions and successful drilling programs. CNRL is best known for its oil production activities, but is also a major natural gas producer. This helps smooth out volatility on the oil side.
CNRL has increased its dividend each time over the past 25 years. Investors who buy CNQ stock at current levels can get a 5% dividend yield.
Canadian National Railway
Canadian National Railway (TSX:CNR) is a contrarian pick right now. The stock is trading below $130 per share at the time of writing, down from $180 early last year.
Tariffs are impacting demand for CN’s services, while businesses wait for more clarity on the impact of trade deals on non-essential orders. It may still be some time before the U.S. signs deals with Canada and other key trading partners, including China, which could create even more headwinds for CN in the coming months.
However, the long-term prospects should be solid. Trade deals will eventually be settled and CN will benefit from economic expansion in the United States and Canada. The company operates a strategically important rail network connecting Canada’s Pacific and Atlantic coasts to the Gulf Coast of the United States.
CN remains highly profitable and is using excess cash to buy back shares while the stock is under pressure. The board has increased the dividend each time over the past 29 years. Investors can now get a dividend yield of 2.8%. Buying CN on major pullbacks has historically proven to be a smart move for patient investors.
The bottom line
Market volatility is expected in the coming months, but Fortis, CNRL and CN are solid businesses and pay good dividends that are expected to continue to grow. If you have some money to work with in a buy-and-hold portfolio, these stocks deserve to be on your radar.
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