Investors are seeing wild swings in equities these days, and the short-term effects on portfolios can be frightening.
For the younger crowd, the volatility is manageable because millennials have enough time on their side to ride out tough markets.
Retirees, on the other hand, don’t have that leisure and are looking for secure investments that offer steady dividend growth and reasonable protection on the downside when Mr. Market falls out of bed.
Here are the reasons why I think BCE Inc. (TSX:BCE)(NYSE:BCE) and Toronto-Dominion Bank (TSX:TD)(NYSE:TD) are smart picks right now.
BCE
The world has changed dramatically in recent years, and BCE’s management team has done a good job of making the necessary acquisitions to keep up with the times.
Today BCE is a media and communications giant with a strong portfolio of assets tapping the wallets of consumers all along the value chain. In fact, I would argue that most people put a bit of money into the pockets of BCE’s shareholders every day.
How?
BCE owns sports franchises, a television network, specialty channels, retail outlets, websites, and radio stations. If you buy a mobile phone, send a text, watch a game, listen to the weather report, download a movie, or check your e-mail, there is a very strong possibility that you are doing this through one of BCE’s assets, either directly or via the back end of the network.
That’s a great business, and it operates in an environment with limited competition.
BCE pays a dividend of $2.60 per share that yields 4.7%. The distribution is very safe, and investors should see annual payout hikes continue.
Toronto-Dominion Bank
TD is another great Canadian company that has few serious competitors and generates fantastic returns for its investors.
The business is a well-oiled sales machine with all customer-facing employees trained to ensure clients are fully aware of every opportunity available to hand over more of their cash to the bank.
That sounds a bit nasty, but it should be taken as tip of the hat to TD’s leadership team. And let’s face it, all the banks are the same in their intentions. TD just happens be one of the best at executing its strategy, especially at the retail level.
TD also has a large U.S.-based operation that provides investors with a solid hedge against any weakness that might hit the Canadian sector. Fears about a housing crash are probably overblown, but TD is very well capitalized just in case Canadian real estate prices really hit the skids.
The company has very little exposure to the oil and gas sector, which is important right now because some energy firms are starting to push the envelope on their lending covenants.
TD pays a dividend of $2.04 per share that yields about 3.8%. The bank has a long history of dividend growth and that trend should continue.
