What are the top stocks to buy if your ultimate goal is to generate steady income during your golden years?
There are many ways to achieve this objective, depending on your time horizon, risk appetite, and the amount of savings you can spare for your retirement portfolio.
In my view, investing in solid companies that produce growing income and that reward their investors through dividends is one of the best ways to accumulate wealth for your retirement needs.
Here are three top dividend stocks from Canada that fit perfectly in this investing strategy.
In Canada, it doesn’t make sense to ignore top-quality lenders if you want to earn growing income from dividends. Among the top five banks, I particularly like TD Bank (TSX:TD)(NYSE:TD) due to its leading position in Canada and its strong presence in the U.S.
TD Bank has grown aggressively in the U.S. during the past decade to counter slowing growth in Canada. That expansion was a great move that not only provided depth to the lender’s business, but also boosted its bottom-line profitability.
Helped by this smart move, TD Bank has been able to hike its dividend regularly. The lender now pays a $0.67-a-share quarterly payout, which it raised by 10% this year. Trading at $74.58, TD Bank stock now yields about 4% per annually.
Among dividend stocks, some of my favourite picks belong to power and gas utilities and pipeline operators. I like these companies because they have very simple business models that often produce very strong income flows for their investors.
North America’s largest pipeline operator and gas utility company Enbridge (TSX:ENB)(NYSE:ENB) is one such stock. Enbridge is a good defensive stock to hold on to and earn growing payouts. The company pays a $0.73-a-share quarterly dividend with an annual dividend yield of 6%. The dividend is forecast to rise 10% per year until 2021.
Over the past one year, Enbridge has accelerated its restructuring plan, selling assets, focusing on its core strengths, and paying down its debt. These measures are likely to benefit long-term investors whose aim is to earn steadily growing income.
Just like gas and power utilities, telecom operators provide another avenue for retirees to invest and earn growing cash flows. In Canada, BCE (TSX:BCE)(NYSE:BCE), the nation’s largest telecom operator, is one such stock.
The company has a solid dividend policy which has been in place for many decades, allowing investors to earn growing dividends in both good and bad times. Its $0.7925-a-share quarterly dividend has more than doubled during the past decade.
Being the largest telecom company in a country where it’s hard for new entrants to challenge the company’s dominance, BCE is a safe bet to place if you’re a long-term investor. Trading at $59.56 share, BCE offers an annual yield of 5.32%.
The above three top dividend stocks give you an good idea about stocks you could consider for your retirement portfolio. In short, look for companies with durable competitive advantage, strong cash flows, and a tendency to reward their investors.
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 Haris Anwar owns Enbridge Inc. stocks. Enbridge is a recommendation of Stock Advisor Canada.