Canadian investors have reason to be uneasy with uncertainty surrounding the ongoing housing drama, rising interest rates, and the TSX slump. Those on the verge of retirement are looking for dividends and reliable income from their investments.
Let’s take a look at Enbridge Inc. (TSX:ENB)(NYSE:ENB) and Fortis Inc. (TSX:FTS)(NYSE:FTS).
Enbridge
Enbridge is an energy-delivery company based in Calgary, Alberta. The company owns and operates the largest natural gas network in Canada.
Shares of Enbridge closed at $51.56 on Tuesday, down 0.04%. The company has suffered with oil’s recent plunge; the stock has fallen 8% in 2017. Nearing its 52-week low of $49.61, it is worth noting that Enbridge has expansive projects on the way, and a strong Canadian dollar should boost earnings in the latter two quarters of 2017.
In May, Enbridge announced a quarterly dividend of $0.61 per share to be paid June 1. It boasts a yield of 4.73%, which should be extremely attractive for any income investor in pursuit of a high dividend.
Fortis
Fortis is a St. John’s, Newfoundland and Labrador-based electric utility holding company that operates in Canada, the United States, and parts of Central America and the Caribbean.
The company closed at $44.15 on Tuesday, down 0.14%. It has had a positive 2017 so far, gaining 6%. In its quarterly earnings report in May, Fortis announced $0.53 earnings per share in Q1, missing estimates of $0.71 by $0.18. Fortis had revenue of $2.27 billion during the quarter compared to estimates of $2.5 billion. However, revenue was up 711% from Q1 2016.
Fortis is set to hold a teleconference on July 28, 2017, to discuss its second-quarter results.
The stock boasts a $0.40-per-share dividend with a 3.63% yield. Its $2.03 earnings per share is expected by analysts to rise to $2.23 by the end of this year. Fortis is another incredibly stable business servicing over three million customers in North America.
Which is the better option?
The share price for Enbridge will continue to be tested by volatility in oil prices. This factor may offset its slightly more attractive dividend for investors.
Fortis has just tapered off from all-time highs in late June, and another earnings report that misses expectations could push the share price down further.
Both of these companies have wide moats and ambitious projects in their pipelines. As we head into the second half of 2017, central banks have made it clear that they are committed to tightening. This would seem to confirm the end of a long credit cycle.
Investors on the verge of retirement should then be looking towards income and dividend-yielding stocks, like the ones above, to bolster their portfolios as the torrid pace of gains experienced after the Financial Crisis will be harder to come by.
