Once in a while, investors come across extra funds that can be put to work for the good old golden years.

Some people see it as free money and make big bets on risky plays. If that’s the strategy, you might as well blow it on a new toy or a wicked vacation.

Foolish investors would prefer to go a more conservative route and pick dividend-growth stocks with a strong long-term outlook.

Here’s why I think Agrium Inc. (TSX:AGU)(NYSE:AGU) and BCE Inc. (TSX:BCE)(NYSE:BCE) fit the bill.


Agrium is one of the fertilizer industry’s top producers of nitrogen, phosphate, and potash. It is also the world’s biggest retailer of seed- and crop-protection solutions.

This integrated business model is unique in the fertilizer- and farm-supply space and has served Agrium and its shareholders well. When one side of the equation hits a weak spot in the cycle, the other tends to pick up the slack.

Agrium has increased its dividend significantly in recent years, and the growth should continue over the long haul as global food demand puts pressure on farmers to produce better crop yields.

The company is also nearing the end of a series of expensive capital projects. As the expanded facilities ramp up production, free cash flow available for shareholders should increase.

Agrium pays an annualized dividend of US$3.50 per share that yields about 3.8%. The stock has pulled back from the highs it hit earlier this year, and investors who missed the rally now have a chance to get in at a reasonable price.


BCE has always been a reliable dividend pick because its business generates lots of free cash flow. That was the case back in the days when BCE was essentially a telephone company, and it still holds true in the modern incarnation of the firm.

Today, BCE is a communications and media powerhouse with assets that include retail operations, sports teams, a television network, radio stations, Internet portals, and specialty channels. The company also owns and operates world-class wireless and wireline networks that deliver all that data and content to its customers.

Combined, the assets form a formidable business that is very well entrenched and unlikely to be threatened by a new national entrant.

BCE continues to invest heavily to maintain its leadership position, and the company is making good progress on its efforts to improve customer service.

The stock isn’t cheap, but you get a quarterly distribution of $0.65 per share that yields about 4.5%. The company has free cash flow growth of at least 8%, so the dividend increases should keep coming at a steady rate.

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Fool contributor Andrew Walker has no position in any stocks mentioned. Agrium Inc. is a recommendation of Stock Advisor Canada.