Investing for the long term can be a rewarding strategy, especially when focusing on generating income. The selection of reliable investments is crucial for success. In the current market, two TSX dividend stocks stand out as solid options: Royal Bank of Canada (RBC) and Canadian Natural Resources (CNR).
Royal Bank of Canada: A Solid Investment Choice
Royal Bank of Canada, the largest lender in the country, has garnered considerable attention for its recent performance. In the first quarter of fiscal 2026, which ended on January 31, RBC reported a 13% year-over-year increase in net income, reaching $5.8 billion. Total revenues for this quarter approached $18 billion.
Adjusted earnings per share (EPS) were recorded at $4.08, surpassing consensus estimates of $3.95. RBC’s president and CEO, Dave McKay, attributed this success to the bank’s diversified business model. Notably, the Wealth Management segment was a standout performer, contributing a net income of $1.3 billion—an increase of 32% compared to the same quarter in the previous fiscal year.
As of now, RBC has a common equity tier-one (CET1) ratio of 13.7%, making it a financially robust institution. During the latest quarter, RBC distributed $2.3 billion in dividends and executed $1 billion in share buybacks. With shares priced at $247.72, the trailing one-year return is an impressive 54.3%. RBC maintains a strong dividend yield of 2.7%, and a $20,000 investment today could grow to $26,177.17 in ten years, assuming dividend reinvestment.
Canadian Natural Resources: An Energy Powerhouse
Canadian Natural Resources has emerged as a leader in the energy sector, which is currently the top-performing sector on the TSX, with a year-to-date return of 38.38%. The large-cap energy stock is trading at $62.26 per share, reflecting a 35% increase this year, primarily due to rising oil prices.
Over the next decade, CNR’s total return is projected to be an impressive 463.45%, translating to a compound annual growth rate (CAGR) of nearly 19%. As a robust dividend payer, the company announced a board-approved dividend increase of 6.4% in March 2026, marking its 26th consecutive year of dividend growth. The current yield stands at 3.83%.
Management’s Free Cash Flow Strategy
- If net debt exceeds $16 billion, CNR will return 60% of free cash flow (FCF) to shareholders.
- If net debt is between $13 billion and $16 billion, the return will be 75% of FCF.
CNR holds the largest reserves in Canada and ranks second globally among energy peers. The company features a balanced asset base with significant long-life, low-decline production capabilities.
Conclusion: Reliable Investments for Income
For long-term investors focused on income, both Royal Bank of Canada and Canadian Natural Resources are exceptional choices. These stocks not only offer reliable cash flows but also have a proven track record of performance. Consider holding these TSX dividend stocks for sustained growth in your portfolio.
