Composite income and capital
Stocks generally rise with earnings growth. Likewise, dividend increases often indicate solid business fundamentals that can help boost the stock price. Investors who buy dividend growth stocks often receive compound income from rising dividends and stock appreciation. It is the best combination of both aspects.
If you’re looking for some of these high-quality dividend growth stocks, here are three to consider buying before 2026.
A top insurance stock with growing dividends
Financially intact (TSX:IFC) has delivered significant total returns for long-term investors. The stock is up 217% over the past decade. Add in the dividends and the total return over that period is closer to 300%.
Intact is Canada’s largest property and casualty insurer. Its national scale gives it a price advantage over competitors. It can be cheaper for customers, but still make money strong underwriting profits.
Intact has increased its dividend for twenty years in a row. The dividend has grown at a compound annual growth rate of 10% over the past ten years. Intact currently yields 1.9%.
A diversified provider of essential services
Exchange Income Corp. (TSX:EIF) was once again a solid dividend stock. The stock is up 198% over the past decade. Add in the dividends and investors would earn a 434% return in that time.
Exchange operates a diverse mix of businesses, but focuses primarily on essential aviation services. The operations are strategically located to cater to Canada’s North. With infrastructure and defense investments expected to strengthen that region, Exchange could be poised for substantial growth.
Exchange has increased its dividend eighteen times in the last twenty years. Given the mid-teens growth forecasts for next year, it is likely that the strong dividend growth trajectory will continue. The stock yields 3.3% today and pays out monthly.
A solid Canadian utility stock for dividends
AltaGas (TSX:ALA) Shares are up 125% in the past five years. Add dividends to that and you’re looking at a total return of 175%.
AltaGas is a critical provider of natural gas infrastructure in Western Canada and the Northern US. The midstream business is driving growth as Canada looks to export more and more propane, butane and liquefied natural gas to Asia. US utilities are showing above-average growth as they modernize infrastructure and increase the interest base.
AltaGas has grown its dividend 6% annually over the past five years. That’s despite the fact that the payout ratio improved dramatically during that time. It currently yields 3.2%.
AltaGas is the more defensive name in this portfolio. Yields will likely return to a mid- to high-single-digit range, closer to other utilities. Still, it doesn’t hurt to have a few highly defensive names in any portfolio mix.
The Silly Takeaway About Dividends
If you’re looking for dividend income that can hold up over the long term, look for dividend growth stocks with strong balance sheets, low payout ratios, and rising earnings that support rising dividends. Names like Intact, Exchange and AltaGas are ideal choices for a solid total return profile.
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