Dividend investing is the heart and soul of most investment portfolios. Many learning how to buy stocks in Canada learn about a dividend strategy first.

Not only do we want a steady stream of dividends bolstering our account balance, but we want to see dividend growth. 

In my opinion, a stagnant dividend is a poor dividend. When I invest in a Canadian dividend stock I want to see increasing numbers, year over year.

That is why I am such a fan (and owner) of Fortis. A 45 year dividend streak? Yes please.

Another benefit that income companies bring to the table is that they often hold up during weak economic times. As I write this, talks of trade wars are making the markets anything but stable.

As a stocks price falls, its dividend yield goes up. As such, these companies become extremely sought after, while growth stocks inevitably tumble hard.

I’ve got my eye on 3 particular companies right now

All 3 of these companies are providing excellent returns with both dividend growth and stock appreciation. So much so I ended up taking a position in one this morning.

How did I find these stocks?

I used our own dividend screener, one that is specially designed to find you the absolute best opportunities for income companies in Canada. If you’d like to find the cream of the crop, have a look at our screener, you won’t regret it.

3 Dividend Growth Stocks For Your Portfolio In 2019

• Alimentation Couche Tard (ATD-B)
• Canadian Natural Resources Limited (CNQ.TO)
• TFI International (TFII.TO)

3. Alimentation Couche Tard (ATD-B)

I was looking at Alimentation (TSX:ATD.B) in late 2018 and I’m not going to lie I am kicking myself for not investing. I didn’t really know enough about the company as a whole, and didn’t bother looking into it too far.

So what did I miss?

I missed a near 30% increase in stock price since Christmas Eve. I missed the opportunity to get in on one of the fastest growing dividends in the country.

Alimentation Couche Tard has a 5 year dividend growth rate of over 28%. Just this last year the company raised its dividend by over 25%.

The best part about it? The company’s free cash flows handily cover the dividend and then some. Alimentation’s dividend only accounts for about 8% of the company’s free cash flows. Which means there is a ton of room for more growth. I expect them to deliver.

Its yield is small, there is no doubt about that. The company only yields 0.63% at the time of writing, but you just simply can’t ignore its growth in both dividend and stock appreciation.

The company missed on both earnings and revenue estimates last quarter, but I’m still not worried. Over the last year, this is the only time the convenience store giant has missed. For those looking for exposure to the United States economy with a Canadian stock, this is it.

2. Canadian Natural Resources Limited (CNQ.TO)

I’ve avoided oil and gas companies for a while now. I own Suncor (TSX:SU), but other than that I’ve tried to stay away from the struggling industry.

However there is one company in particular I’ve been keeping an eye on and is slowly impressing. That company is Canadian Natural (TSX:CNQ). 

The company purchased Shell’s Canadian assets back in 2017, and is striking again, purchasing Devon Energy’s Canadian assets no more than a week ago for $3.8 billion. CN Resources is looking to take a strangle-hold on the Canadian oil and gas industry, and is buying up assets when times are tough. A turnaround in the industry could mean big things for both its stock price and its dividend.

As for the dividend, the company boasts a very healthy 3.78% yield at the time of writing. Couple that with a 18 year dividend streak and a 5 year dividend growth rate of 18%… in my opinion you have one of the best dividend companies in the country.

The stock is ripe for the picking

In my opinion, CNQ is trading at a deep discount right now. With a forward price to earnings of only 12 and a price to book of 1.36, the stock is ripe for the picking. Analysts have a 1 year price target of $47.96 on the company. This signals over 30% upside on the Canadian oil giant over the next year.

Combine that with one of the strongest dividends in the country, and an investment in CNQ could potentially be a home run.

1. TFI International (TFII.TO)

Daniel Kent took a position in TFII.TO on June 3rd

TFI International (TSX:TFII) is a stock that is often never talked about, and has been secretly chugging along, beating earnings expectations and more importantly, increasing its dividend.

The company’s yield currently sits at 2.62%, and with a dividend growth streak of 8 years and a 5 year dividend growth rate of 17%, a quiet investment in a somewhat quiet company could pay off.

TFI has beat analyst estimates on both earnings and revenue every time over the last 5 quarters

Most notably in earnings. The company has beat earnings expectations by double digits over the last 5 quarters, and during the beginning of their fiscal 2018, was smashing them out of the park with earnings beats of 46% and 41%.

The company’s dividend growth numbers may not compete with the two others I’ve mentioned, but out of the three, I see TFI with the largest upside potential in terms of stock price.

The stock is trading at only 9.81 times forward earnings and has a 5 year PEG of only 0.59. If TFI can continue to produce and beat both analyst and investor expectations, its only a matter of time before this stock starts rising.

But hold on…

There Are Lots More Out There

When done correctly, dividend growth investing can create that sought after “snowball effect” that grows your portfolio exponentially over the years. The end result? An early retirement and a bloated investment account. Isn’t that the goal?

However, there are a multitude of things you need to take into consideration prior to investing in income companies. Dividend health is one of the most important things to take into consideration, along with current stock price.

Luckily for you we have one of the BEST dividend screeners on the internet

How do you think I found these three gems?

As amazing as the above 3 stocks are…

they aren’t even in the top 10 on the Stocktrades.ca Dividend List.