Dividend investors are always on the lookout for stocks that will help them meet their retirement goals, but the recent volatility in the market has really hammered some of the former favourites.
In uncertain times it is especially important to choose companies that hold leadership positions in a growing sector and have solid track records of dividend growth and capital appreciation.
Here are the reasons why I think investors should consider BCE Inc. (TSX:BCE)(NYSE:BCE) and Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) right now.
BCE Inc.
Canada’s largest telecom and media company just reported another quarter of solid results.
Adjusted Q2 2015 net earnings came in at $0.87 per share, 6.1% higher than the same period last year. Free cash flow for the quarter jumped more than 14% to $931 million.
The company continues to see strong subscriber growth for its wireless, TV, and Internet offerings, and the new launch of its Gigabit Fibe Internet service will put Bell even further ahead of the competition in several core markets.
BCE controls a formidable portfolio of assets all along the communications value chain, including a TV network, specialty channels, radio stations, sports franchises, and retail locations.
Combined with the company’s world-class mobile and wireline infrastructure, these assets form a solid and diversified business that is well positioned to grow for decades.
BCE pays a dividend of $2.60 per share that yields about 4.9%. The company increases the distribution on a regular basis, and investors should see the payout continue to rise with the improvements in free cash flow.
As a defensive play in a difficult economic environment, BCE is about as good as it gets.
Bank of Nova Scotia
Bank of Nova Scotia is often overlooked in favour of its larger peers, but the company deserves to get more respect.
Over the past five years management has spent more than $7 billion to build a strong business presence in Latin America. The company is primarily focused on Mexico, Peru, Colombia, and Chile. These four countries form the core of the Pacific Alliance, a trade bloc set up to enable the free movement of capital and goods among the member countries.
This presents an enormous opportunity for Bank of Nova Scotia because it now has significant operations in each country. As businesses expand their reach they need a wide range of new financial products and services, and Bank of Nova Scotia is capitalizing on that growth.
The bank is undergoing a comprehensive restructuring program, and investors should start to see the fruits of these efforts in the second half of this year.
Bank of Nova Scotia pays a dividend of $2.72 per share that yields about 4.4%. The company trades at a very attractive 10.1 times forward earnings and just 1.6 times book value.
Investors with a long-term outlook can buy this stock and simply forget about it for the next 20 years.
