A dividend stock that increases its payout can make for an extremely valuable investment to hang on to for years. The increases can help offset the effects of inflation and ensure that rising costs aren’t chipping away at your recurring dividend income. One stock which has been a great dividend investment over the years is Capital Power Corporation (TSX:CPX).
The utility company has a large presence in Canada and the U.S. and has been around for more than 100 years, dating back to 1891. The Alberta-based business routinely posts profits and that has allowed it to increase its dividend payments for several years.
On July 30, Capital Power announced that it was raising its dividend by 6% to $0.6519 for its next quarterly payment, which is payable on Oct. 31. Five years earlier, the stock was paying investors a quarterly dividend of $0.48 – it has risen by 36% since then. With the new dividend, investors who buy the stock today can expect to collect a yield of approximately 6.1%. That means to collect $1,000 in annual dividends, you’ll need to invest approximately $16,400 into the utility stock.
Capital Power makes for a reasonably priced dividend stock to buy right now as it trades at less than 14 times its estimated future profits and around 1.5 times its book value. Year to date, it has risen by 13% and over the past five years, the stock has climbed by 43%. For investors looking for a stable income stock to buy and hold, Capital Power can be a great option for your portfolio.