Retirees: 2 Top Income Stocks to Start the New Year

Here’s why Rogers Communications Inc. (TSX:RCI.B)(NYSE:RCI) and Algonquin Power & Utilities Corp. (TSX:AQN) are strong picks right now.

| More on:
The Motley Fool

Pensioners are increasingly turning to dividend-paying stocks as a way of getting supplemental income.

This wasn’t always the case, but the drop in interest rates over the past few years has eliminated the return in most savings accounts and reduced the payouts on GICs to levels that simply don’t generate enough income.

The search for higher yield comes with more risk, so it is best to choose companies that have long histories of dividend growth supported by rising revenue.

With this thought in mind, I think income investors should consider adding Rogers Communications Inc. (TSX:RCI.B)(NYSE:RCI) and Algonquin Power & Utilities Corp. (TSX:AQN) to their watch lists.

Rogers

Rogers is a media and communications powerhouse. The company owns mobile phone, cable, and Internet operations as well as the Toronto Blue Jays, part of the Maple Leafs, radio stations, television channels, magazines, websites, and retail stores.

Rogers has struggled with customer service issues and is fighting hard to keep cable customers from cutting the cord, but management is making good progress on the turnaround efforts and investors continue to benefit from the strong free cash flow generated by the company’s core assets.

Rogers pays a quarterly dividend of $0.48 per share that yields a safe 4%. If you are a Blue Jays or Maple Leafs fan, you can own a bit of your favourite teams and get a nice return to boot.

Algonquin Power

Income investors often overlook Algonquin Power in favour of its larger peers, but the company has a fantastic track record of dividend growth, and long-term shareholders have enjoyed some significant capital gains.

Algonquin Power owns renewable energy and utility distribution assets in Canada and the United States.

The company continues to add new assets through acquisitions and new project developments, and these facilities are driving both revenue and earnings higher.

Algonquin Power reported adjusted net earnings of $82 million, or $0.31 per share, for the first nine months of 2015, up from $53 million, or $0.22 per share, for the same period last year.

The company pays an annualized dividend of US$0.385 per share that yields about 4.6%. Management raised the distribution by 10% earlier this year, and investors should see the payout continue to increase as cash flow rises with the addition of new assets.

The stock has increased 120% in the past five years.

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 Andrew Walker has no position in any stocks mentioned. The Motley Fool owns shares of ROGERS COMMUNICATIONS INC. CL B NV. Rogers is a recommendation of Stock Advisor Canada.

More on Dividend Stocks

Glass piggy bank
Dividend Stocks

How to Accelerate Your TFSA Returns From Dividend Stocks

The stock market saw a correction in January, as investors booked profits ahead of the central bank’s interest rate hikes. The TSX …

Read more »

money cash dividends
Dividend Stocks

Top 3 Dividend Stocks in Canada for 2022

Canada is home to some of the best dividend stocks in the world. With finance, telecoms, and energy dominating the …

Read more »

calculate and analyze stock
Dividend Stocks

2 Top TSX Stocks to Put on Your TFSA Buy List

TFSA investors are searching for undervalued TSX stocks to buy that have the potential to deliver big gains in 2022. …

Read more »

Payday ringed on a calendar
Dividend Stocks

Get Unbelievable Monthly Income With High-Yield Dividend Stocks

The only thing better than a dividend stock is a stock that pays dividends every month. For people who live …

Read more »

gas station, convenience store, gas pumps
Dividend Stocks

1 Key Catalyst Investors in Couche-Tard Stock Need to Watch

One of the top value stocks on the TSX, Alimentation Couche-Tard (TSX:ATD) has been a strong performer over the past year. …

Read more »

Value for money
Dividend Stocks

2 Top Value Stocks I’m Looking to Buy Right Now

Value investing is a lot more than just grabbing stocks that look inexpensive. The shares of an organization in permanent …

Read more »

Various Canadian dollars in gray pants pocket
Dividend Stocks

RRSP Investors: 2 Top Canadian Dividend Stocks to Buy for Total Returns

Canadian savers are searching for good TSX stocks to buy inside their self-directed RRSP that pay reliable dividends and can …

Read more »

Cogs turning against each other
Dividend Stocks

2 Dividend Stocks That Could Stabilize Your TFSA During a Market Correction

A common strategy for investing during a market downturn is to allocate a greater proportion of your portfolio towards dividend …

Read more »