Canadian pensioners are looking for reliable dividend stocks to tuck away in their TFSA portfolios.
Investors often overlook IPL when searching for an energy infrastructure stock to add to their holdings, but that might begin to change.
The company has a diversified asset base that includes natural gas liquids (NGL) extraction facilities, oil sands pipelines, conventional oil pipelines, and a liquids storage business based in Europe.
Management scored a good deal on two NGL facilities and related infrastructure last year, and the company has a number of promising capital projects under development.
As a result, investors should see dividends continue to rise at a healthy rate as as the new projects begin to generate revenue and boost cash flow.
IPL currently pays a monthly distribution of $0.135 per share for a yield of 5.7%.
BCE has been a favourite holding among retirees for decades, and there is little reason for that to change.
The company recently closed its acquisition of Manitoba Telecom Services in a move that bumps BCE to the top spot in the Manitoba market and sets the company up with a solid base to increase its presence in western Canada.
Critics of the stock say it is overvalued and will take a hit as interest rates rise. It’s true that BCE isn’t cheap, and investors searching for a value play might want to look elsewhere.
However, the company holds a dominant position in its industry, and the stock tends to hold up well when the broader market runs into trouble.
In addition, the dividend is rock solid and provides a juicy 4.9% yield. Interest rates will eventually drift higher, but it will be some time before your bank can offer a GIC that comes remotely close to BCE’s yield.
Is one more attractive?
IPL has a higher yield and probably offers better upside potential once the energy sector recovers. If you can handle a bit of extra volatility, the pipeline company might be the better pick today.
If you are more conservative and simply want an above-average yield from a stock you can buy and tuck away for 10 years, BCE is worth considering as the first choice.
An equal holding of both stocks might actually be the ideal way to go.
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Fool contributor Andrew Walker has no position in any stocks mentioned.