This is a guest contribution from The Financial Canadian. I immediately knew that Ben and I had a lot in common when I read the following passage:. Throughout this post I will be providing investment research. However, this research is not valid without the assumption that readers will be investing with a long time horizon meaning a minimum of three years.

Long-term systematic investing is extremely important. Investors can lose out on outstanding long-term returns by trading too often. With a short time horizon, we are subject to the whims of the market and investor psychology. Over the long-run, however, better businesses outperform the overall market.

This is especially true in the world of dividend growth investing. Reinvesting those dividend payments results in a snowball of compound earnings that can eventually grow into a substantial passive income. This is not possible with a short time horizon, so keep that in mind as you read the rest of this post. Long-time Sure Dividend readers will notice that my criteria are very similar to the Eight Rules of Dividend Investing. This is no coincidence. I selected this stocks by looking for:.

Note that none of these criteria are completely stiff. If a stock is lacking in one category, this may be compensated for with fantastic performance in another.

The Toronto-Dominion Bank TD is a diversified financial services provider with operations in both Canada and the United States. From their website , their business is divided into three main segments:. TD has a pleasant blend of both organic growth and growth through acquisition. Organically TD continues to mature in the Canadian markets, being the largest bank by assets and the second largest bank by market capitalization behind RBC.

Their acquisitions are predominantly in the U. Retail segment, and include the privatization of TD Banknorth, Commerce Bank N. More importantly, their payout ratio has been among the best in their peer group. In , only the Canadian Imperial Bank of Commerce had a lower payout ratio than TD. Take a look at the data:. This low payout ratio means that TD has plenty of room to further grow their dividend.

It also means that they might have sources to reinvest their money at high rates of return. Retail Banking segment comes to mind.

Though he is new as CEO, Masrani is no newcomer to the bank. After joining the bank in , he most recently served as the head of their U.

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The second major change was a shakeup at the executive suite of TD, which reflects a focus on technology. There were a few other changes, which are outlined in this helpful article from Newswire.

Both changes are positive in my opinion. In Canada, banks enjoy some of the largest barriers to entry of any industry. In the US, there are many more smaller competitors, but barriers to entry are still significant. The US barriers to entry are regulatory in nature, not due to an oligopoly as in Canada. In some senses it is advantageous that there exist smaller counter parties in US banking, as this presents acquisition opportunities for the Bank more on that later.

They later purchased Commerce Bancorp and a slew of Florida banks until their operations ran across the entire Eastern seaboard of the United States.

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Fast forward to today, and they now have more US branches than they do in Canada. At the present, I think there is tremendous opportunity for growth in the US retail bank for TD.

Their Price-to-Book value is the second lowest in the Big 5, behind only BMO. Based on earnings, though, the valuation story is different. TD actually has the highest price to earnings multiple among the Big 5. TD is preferred over the rest of the Big 5 by many investors, and that demand explains the valuation premium. My view is that there is three main reasons why. First of all, TD derives a large portion of their earnings from their stable Canadian Retail Banking segment.

TD Bank Annual Report. Other banks derive a larger portion of their earnings from more volatile segments like capital markets. Investors are willing to pay a little extra for the lower earnings volatility that comes with such a high concentration in retail banking.

In the third quarter:. TD Q3 Report to Shareholders. Altogether, TD is a fantastic dividend growth prospect. Enbridge ENB is an energy transportation company based in Calgary, Alberta.

They are in the business of transporting energy across North America — this includes crude oil, liquid hydrocarbons, and natural gas. While Enbridge operates in the broader energy industry, they have been largely isolated from the downturn in energy prices due the the nature of the business they are in.

They also have fantastic dividend growth prospects. Strong Future Growth Prospects Complimented by Purchase of Spectra. Enbridge has been popular in the media lately because of their decision to purchase Spectra Energy Corp. Both shares of Enbridge and shares of Spectra jumped at the news, which signals that investors were pleased.

The purchase of Spectra will create an energy transportation giant that moves natural resources across North America. They will have a fantastic competitive advantage, and synergies after the purchase should result in significant savings for the pro-forma company. Enbridge has a fantastic history of growing their dividend over time.

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One of the highlights of the proposed Spectra purchase is the impact on dividend. That being said, there are a lot of variable at play here — most notably whether the Spectra deal will actually close. Only time will tell. This is mostly because they are in the business of energy transportation , not production or exploration.

Enbridge makes money based on how much product they can move from Point A to Point B — the market price of the product they are moving does not effect their earnings. Enbridge also hedges against changes in interest rates and foreign exchange, further reducing the risk of investing in this company.

Because of this business model, Enbridge has survived and prospered, though many of their peers in the energy industry have struggled.

As long as the deal closes, I am confident that Enbridge is one of the best dividend growth stocks in Canada. The Canadian National Railway Company CNI is a Class I railway corporation with headquarters in Montreal, Quebec.

They were incorporated as a Crown corporation in and went public through an IPO in CN has experienced a tough year to date because of a slowdown in the Canadian economy, mostly related to the drop in demand for oil.

CN is the beneficiary of an extremely wide economic moat. Entrance into the railway industry requires such massive capital requirements that newcomers are rare. Railways are also subject to very strict regulatory requirements. The North American railway industry is an oligopoly, where the market share is held almost exclusively by the Class I railways:. Of the Canadian names in this list, the only ones that operate nation-wide are CN and Canadian Pacific Railway.

This creates what is, in essence, a duopoly. Operationally, CN presents ample diversification. Geographic diversification is also present — from their annual report: Canadian National Railway Website. CN pays a quarterly dividend that they typically raise once per year in January. At current levels, the dividend is also very safe. This indicates that CN has plenty of room to further raise their dividend payments, or participate in share buybacks to further return money to shareholders.

These three stocks represent some of the best dividend growth stocks in Canada right now.

Put together, they should provide ample diversification since they do business in three independent industries. Keep an eye on them — buying on dips provides an even better value proposition. Click here to read more investment analysis from the Financial Canadian. Published September 27th, This is a guest contribution from The Financial Canadian. I immediately knew that Ben and I had a lot in common when I read the following passage: The Underlying Assumption Throughout this post I will be providing investment research.

I selected this stocks by looking for: Toronto-Dominion Bank The Toronto-Dominion Bank TD is a diversified financial services provider with operations in both Canada and the United States. From their website , their business is divided into three main segments: Canadian Retail including TD Canada Trust, Business Banking, TD Auto Finance Canada , TD Wealth Canada ,TD Direct Investing and TD Insurance.

Wholesale Banking including TD Securities. Take a look at the data: A Strong Economic Moat In Canada, banks enjoy some of the largest barriers to entry of any industry.