The Simple 3-Stock Retirement Portfolio for Everyone

When it comes to your retirement portfolio, it’s best to keep things simple with Canadian National Railway Company (TSX:CNR)(NYSE:CNI), TransCanada Corporation (TSX:TRP)(NYSE:TRP), and Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM).

| More on:
The Motley Fool

As so many Canadians head into retirement, they face a plethora of options. Unfortunately, this can be counterproductive, as many investors will simply be confused. Worse still, many of these choices come with high fees.

But when faced with these problems, the simple solution is usually the best one. More specifically, if you’re willing to hold a few solid dividend-paying companies, you can save yourself from the more complicated strategies. You can also keep the fees that financial advisors want to take from you.

Below we take a look at three such companies.

1. Canadian National Railway

Canadian National Railway Company (TSX: CNR)(NYSE: CNI) has been around for nearly 100 years since its creation in 1919. And there’s no reason to believe it won’t be around for another century.

There are a few very simple reasons. One, railroads face limited competition (there are only six major carriers in North America), and barriers to entry are insurmountable. So there’s practically zero threat of new competitors emerging – the cost of laying down track is just too great.

Secondly, CN Rail is easily the best-managed railroad company out of these carriers. Its operating ratio, which measures expenses as a percentage of revenue, is consistently lower than its peers.

Finally, CN has the best track network of any carrier. It’s the only one that reaches all three coasts (West Coast, East Coast, and Gulf Coast), and importantly it bypasses the congested Chicago hub. So investors can sleep easily, knowing that CN will continue to deliver – for both customers and shareholders – for decades.

2. TransCanada Corporation

Canada is not short of companies in the energy sector. But most of these companies are not suitable for your retirement portfolio. As shown recently, these companies can suffer greatly when energy prices are depressed, and share prices can be very volatile. Dividend cuts are not uncommon.

But there’s one name that’s much more reliable: TransCanada Corporation (TSX: TRP)(NYSE: TRP). TransCanada has made plenty of headlines in recent years, thanks to its controversial Keystone XL pipeline project. But beyond the noise, there’s a lot to like about the company.

Rather than produce, TransCanada transports oil and gas to markets. This means its infrastructure is mission-critical for its customers, resulting in very smooth revenue for many years.

If you’re still sceptical, TransCanada’s dividend has gone up by 140% since 2000, and has never been cut during that stretch. Not even during the economic crisis, when oil traded below $40 per barrel.

3. CIBC

Speaking of sceptical, many investors are still wary of Canadian Imperial Bank of Commerce (TSX: CM)(NYSE: CM), known as the bank “most likely to run into a sharp object.”

But after numerous mistakes over many decades, CIBC is simplifying itself dramatically, focusing on Canadian retail banking. As a result, its profitability and capital ratios consistently rank higher than its peers. And the company still pays out less than half its earnings to shareholders, so there’s plenty of room for dividend increases in the years ahead. That should be perfect for any retiree’s portfolio.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Benjamin Sinclair has no position in any stocks mentioned. David Gardner owns shares of Canadian National Railway. The Motley Fool owns shares of Canadian National Railway. Canadian National Railway is a recommendation of Stock Advisor Canada.

More on Dividend Stocks

Businessmen teamwork brainstorming meeting.
Dividend Stocks

1 Magnificent Dividend Stock Down 15% to Buy and Hold Forever

Enbridge is off the 12-month lows but still trades at a large discount to its 2022 high.

Read more »

Increasing yield
Dividend Stocks

My Top 5 Ultra-High-Yield Dividend Stocks to Buy in May

If you’re looking to build a passive-income stream, these five dividend stocks should be on your radar.

Read more »

Payday ringed on a calendar
Dividend Stocks

A 10.6% Dividend Stock That Provides Monthly Cash Payments

A dividend stock with a mouth-watering yield providing monthly cash flow streams.

Read more »

Dividend Stocks

The Top Canadian REITs to Buy in May 2024

These three REITs have envious growth potential and trade cheaply today, making them three of the top Canadian stocks to…

Read more »

Young woman sat at laptop by a window
Retirement

Why I Can’t Stop Buying Shares of This Magnificent High-Yield Stock in My Retirement Account

This utility is an excellent retirement stock, providing juicy income, income growth, and wealth creation for the long haul!

Read more »

A close up image of Canadian $20 Dollar bills
Dividend Stocks

Passive Income: How Much to Invest to Earn $1,000 Each Year

If you want the right passive-income producer, you want historical performance and future growth, and this dividend stock provides exactly…

Read more »

Cogs turning against each other
Dividend Stocks

1 Magnificent TSX Dividend Stock Down 9% to Buy and Hold Forever

A high-yield TSX dividend stock is a buying opportunity for long-term investors.

Read more »

money cash dividends
Dividend Stocks

2 Under-$10 Dividend Stocks I’d Buy Right Now

Here's why low-cost dividend stocks such as Decisive Dividend should be part of your shopping list in 2024.

Read more »